Next Stop $50 for Silver

Last week, I saw silver rise $1 in one day. I remember when the white metal’s total cost was $1! When I urged readers three years ago to load up on silver at $10 because it was headed to $50, peopled insisted that I was insane. Now that we are ticking at $37, it doesn’t look so crazy after all.

Investment demand is overwhelming industrial demand by a large margin. The world produces about 1 billion ounces of silver a year to meet 1 billion ounces a demand for jewelry and industrial process. But over the past year, an additional 300 million ounces of investment demand has piled on top of that, creating the parabolic moves in prices that we have seen this year. The total demand for silver today is the same as it was in 1980, when a corning operation by the Hunt brothers drove it to $50/ounce.

Geologically, silver is 17 times more common than the yellow metal. All of the gold ever mined is still around, from King Solomon’s mine, to Nazi gold bars in Swiss bank vaults, and would fill two and a half Olympic sized swimming pools. But most of the silver mined has been consumed in various industrial processes, and is sitting at the bottom of toxic waste dumps.

Silver did take a multiyear hit when the world shifted from silver based films to digital photography during the nineties. Now rising standards of living in emerging countries are increasing the demand for silver, especially in areas where there is a strong cultural preference for the jewelry, as in Latin America. That means we are setting up for a classic supply demand squeeze.

Whatever you do, don’t buy silver right here. Wait for a more substantial dip. When you do decide to take the plunge, take a look at top producers Silver Wheaton (SLW) and Coeur D Alene Mines (CDE), the ETF (SLV), and the leveraged ETF (AGQ). The big question is now, should I let target creep take hold and raise my long term forecast to $100? That might be really insane!

To see the data, charts, and graphs that support this research piece, as well as more iconoclastic and out-of-consensus analysis, please visit me at www.madhedgefundtrader.com . There, you will find the conventional wisdom mercilessly flailed and tortured daily, and my last two years of research reports available for free. You can also listen to me on Hedge Fund Radio by clicking on “This Week on Hedge Fund Radio” in the upper right corner of my home page.

Comments

[SuperRay]

My He's a Fucking Turd, isn't he?  So full of his own bullshit, he thinks everybody else is just stupid.  He must be fellating someone to be allowed to post here (with apologies to Max Keiser  :  )    )

[Republican Lackey]

Imagine how much Iran and China would be crushed if Gold plunged in price?

[Republican Lackey]

Silver is going down. I'd say $20.

[newstreet]

Rats!  Now I have to sell my bag of 64 Kennedy Halfs.

[strannick]

SLV?

Now that is insane.

Effing insane...

[strannick]

Sounds like if this MHFT had just held onto his silver, he wouldnt have to be revising his investment history, and panhandling for subscribers.

[Hedgetard55]

MHFT was bashing yen last year... it then took off to it's most recent highs, and would be there today but for massive, and ultimately futile, CRB intervention.

MHFT is a great fade, though!

[plata pura]

That post was right off the hozel into an unplayable. Take your penalty and reload.

[gmrpeabody]

Mulligan anybody?

[CustomersMan]

    Sorry, I'll take the lost ball on that one. Outta play.

[GOSPLAN HERO]

Obammy likes silver.

[CustomersMan]

       I'm picturing somethin, wait, what is it, it looks like some sort of a collection bag of some sort, no wait, can it be, wait, no, yes it is an .................... Ass Douch-Bag,..new to the silver market

[gabeh73]

MHFT what do you think of the US supporting Al Qaeda again? Big surprise huh?

Could you ask Gates what the difference is between the House of Saad and Gaddafi? why is one evil and the other is a good friend? does it have anything to do with who stores their own silver and gold and who keeps it in vaults owen by the right people? Does it have anything to do with who buy more weapons from US military contractors?

[ATG]

Q has $6.5 B gold ripe for the plucking

[ATG]

J'accuse MHFT, fraud dude

Tough to BS people with access to the facts and your website

Three years ago in March 2008 silver traded @ $20.685

http://bit.ly/hXZkG1

Your closest mention of silver then said absolutely nothing about buying it @ $10

http://www.madhedgefundtrader.com/february_27__2008.html

MHFT mention of silver was six and a half months later @ $10.40, called it The Great Unwind of 2008 Continues, said nothing about buying it

http://www.madhedgefundtrader.com/september_11__2008.html

Silver and SLV targets $29 overbought, particularly with repeat March 2008 & 2011 margin increases before it dropped to $8.79 in October 2008

http://stockcharts.com/freecharts/gallery.html?%24silver

http://stockcharts.com/freecharts/gallery.html?s=slv

JPM silver shorts hedging $88 B in mortgages say it all MHFT

How are those Stockton foreclosure buys and 220 mph high speed train coming along?

(Hint: this trailer garage duplex went from $200 K then to $41 K now)

http://www.zillow.com/homedetails/1048-S-Shasta-Ave-Stockton-CA-95205/15...{scid=hdp-site-map-list-address}

Nice call on DIS, 33 to 15 to 43 since Sep 2008

[Rahm]

LOL, you posted as I was searching his site to post above... truth is, he plays both sides. 

MHFT = Internet's Jim Cramer

[GubbermintWorker]

Oh snap!

[Imminent Crucible]

I'm afraid Moe Stooge Trader is a pathological liar.

[drchris]

Interesting.  When I loaded up on silver over the summer this douche said that silver's run was over.  MHFT = EPIC FAILURE

[Bay of Pigs]

But the wind was blowing a different direction then wasn't it?

LMAO. 

[MiningJunkie]

Sorry MHFT - I have owned silver since 2003 under $5.00 and I DON'T subscribe to your letter...

[apberusdisvet]

Some "talk" their book (Progressive Phil and Ilene); others their ego (Reggie is a good example, but he's ususally spot on).  MHFT seems to live in an alternate universe of fibbery.

[AR15AU]

My target has always been $200 / oz.  

Wouldn't go near SLV or AGQ.

[mogul rider]

I now know why the precious got rocked today. Mad hedgie got sandwiched. Sorry dude too late to the cycle party maybe next time. You called the wekkly top perfectly

thanks

[impending doom]

If MHFT says silver is gonna hit $50 you better believe it's gonna hit $20...

[klevera]

Dude you r just shameless I remember u were talking about precious metals didn't have good risk awards in the begining of this year. Now u r talking as if you had been super bullish about precious metals. U r just shameless lol

[High Plains Drifter]

This guy changes like the wind.  280 dollars to listen to the chameleon? No thanks....

[slowimplosion]

If the term "risk awards" was used, well that is worse than shameless.

[dumpster]

slv  buy it while their is still some silver in the ETF''

it may underpreform in the long term .. when the street realizes the silver is gone .

Taken out by china yadda to disguise their silver habits

[New World Chaos]

SLV and leveraged ETFs are scams not suitable for investing.  They are for day trading- don't ever hold overnight, in fact don't day trade silver at all because it's so manipulated and Blythe knows how to paint the tape.  MHFT surely knows all this.  The fact that he does not mention it makes me think he works for JP Morgan.

[outamyeffinway]

World production last year was around 700mm oz's, demand greater. Deficits are met with already above ground supply. Just nit pickin'. You know this stuff.

[Lets_Eat_Ben]

17:1 sounds pretty good to me

[Rahm]

Don't believe anything this guy writes.  He's a shill, and im very suprised he writes for ZH.  :(   The only explaination, is that he pays ZH to advertise his column on it (nothing else makes any sense).

Bullish on PM's?  Really?  You have loved silver and gold?  The barbarous relic and it's smaller brother?  The truth is, MHFT plays both sides, and reposts the things he wants you to see, to make himself look better.  Read through his writings, and you'll find way more truth to that statement than you could ever believe. 

http://www.madhedgefundtrader.com/january-26-2011-2.html

Beware the Coming Collapse of Gold. Last year’s sure thing is rapidly turning into this year’s sure loser. After bringing in a torrid 29% return in 2010, the barbarous relic has only managed a flaccid 7% loss so far this year, much to the distress of hedge funds and gold bugs alike. The triple top on the charts that set up over the last three months could not be more clear. What is giving traders ulcers now is the prospect of a much more serious sell off in the yellow metal in coming weeks and months...................................................

..................The selling has been so aggressive, that it has spread like an out of control virus to the rest of the entire metals complex. So far this year, silver (SLV) is down 8.5%, and platinum (PPLT) %. To throw the fat on the fire, one large hedge fund was seen yesterday unloading a long term position which took it down to a new three month low at $1,224. Others such hurried liquidations are expected to follow. This is truly the commodity that takes the stairs up and the elevator down.

http://www.madhedgefundtrader.com/october-4-2010-2.html

How about precious metals? Last month, the sector rocketed, with gold (GLD) up 6%, silver (SLV), 16%, platinum (PPLT), 9%, and palladium (PALL), 16%. Individuals, institutions, and central banks alike fought with each other to acquire positions in this space. Hmmmm. I don’t think I’ll load the boat here.

http://www.madhedgefundtrader.com/september-29-2010-2.html

The only caveat I would ad is that this is not exactly a new trade, and that there is certainly more risk at $26.30/share than there was at $14. If silver turns, this will definitely be your E-ticket ride to the downside.

[The They]

+37 This guy is a momentum junky

[Lets_Eat_Ben]

17:1 sounds pretty good to me

[covert]

no matter the price, it's worth it! look at this:

http://www.patriotactionnetwork.com/forum/topics/islam-and-shariah-law-are

[The They]

Are you high?

Who could believe this stuff if they weren't?

[unwashedmass]

the fraud and corruption in the Comex/CTFC/JPM complex were on full neon display today....

major spike down in silver BEFORE the peasantry was told of the new margin requirements....

funny? eh?

Options expiration is Monday.

No point in getting in Blythe's way before the Comex close 1:30 monday...

after that.....bingo...that's for the discount Blythe!!!!!!!!

Meanwhile, what a sad, sad commentary this is on our government and "regulators", eh? Blatant, outright fraud and corruption......

and is anyone going to do anything? Nope.