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Some Observations On Recent Gold (And Silver) Volatility

Tyler Durden's picture




 

Submitted by Jeff Clark of Casey Research

The Face of Volatility

On February 29, gold dropped 4.8% and silver 6.2% (based on London fix prices). That's quite the fall for one day. We've seen prices that have risen that much, too. But as I'm about to show, these ain't nothin', baby.

Based on our experience, we've been saying for some time that volatility will increase as the markets fight their way to the mania phase of this cycle – and that once there, the gyrations will jump even higher. This call doesn't exactly require one to go out on a limb; it makes sense since more investors will be crowding in – and volatility was high in the 1979-'80 mania.

First, let's put last Wednesday's big plunge in perspective. Here's a picture of the daily changes in the gold price since 2003, based on London fix prices. (This chart is very busy, but I want to show the bulk of the bull market in one visual.)

(Click on image to enlarge)

A 4.8% decline is one of gold's bigger one-day movements over the past nine-plus years. But as you can see, there have been a number of days where gold rose or fell more than 5%. And it exceeded 6% on five occasions.

Here are the data for silver.

(Click on image to enlarge)

Last Wednesday's decline of 6.2% was one of the metal's bigger one-day movements. However, it's exceeded 10% on 14 occasions, 15% three times, and rose an incredible 20.06% on September 18, 2008.

You might think this kind of volatility is high – and it's true. Worse – or better, depending on how you see things – the volatility in the underlying commodity is magnified in the related company stocks. This is why Doug Casey calls mining stocks, especially the juniors, "the most volatile stocks on earth." But the thing is, metals volatility has been higher in the past, particularly during a mania.

Here's what I mean.

The following chart documents gold's daily price changes from 1976 through the end of 1980. Take a look at the jump in volatility in 1979-'80.

(Click on image to enlarge)

Volatility became the norm in 1979 and especially 1980. Fluctuations of 4% or more were not uncommon.

Here's the same chart for silver. The metal's volatility during the 1979-'80 period became extreme.

(Click on image to enlarge)

Daily price movements of 6% or more didn't occur once prior to 1979 – but then they became commonplace.

I wanted to take a closer look at the biggest price fluctuations during this period, so I ferreted out the largest days of volatility for each metal. For gold, I selected daily movements of greater than 5%.

(Click on image to enlarge)

During this five-year period, gold saw fluctuations greater than 5% on 38 days (19 up, 19 down). Not surprisingly, more "up" days occurred leading up to gold's peak of January 21, 1980, and more down days came after it.

And yes, gold rose an incredible 13.3% on January 3, 1980. As it turned out, that biggest one-day rise was only 18 calendar days away from the very peak of the market. And the biggest decline of 13.2% on January 22, 1980 was the signal that the top was in.

For silver, I used one-day movements of 10% or more, all of which occurred in 1979 and 1980.

(Click on image to enlarge)

The silver price had fluctuations of 10% or more on 34 days (17 up, 17 down). They occurred over a period of only 15 months, an average of more than two per month.

And yes, silver really did rise a whopping 36.5% on September 18, 1979.

So while last Wednesday's price movements for gold and silver were big, we simply haven't seen this kind of volatility in our current bull market.

Now let's have some fun. Let's say we match the most volatile days from 1979-'80 at some point before the current bull market is over. If we use gold's biggest up day (13.3%) and biggest down day (13.2%), here's what would happen to prices from various levels. Remember, these are one-day gains and retreats:

Gold Price
+13.3%
-13.2%
1,700
1,926.10
1,475.60
1,750
1,982.75
1,519.00
1,800
2,039.40
1,562.40
1,900
2,152.70
1,649.20
2,000
2,266.00
1,736.00
2,250
2,549.25
1,953.00
2,500
2,832.50
2,170.00
2,750
3,115.75
2,387.00
3,000
3,399.00
2,604.00
4,000
4,532.00
3,472.00
5,000
5,665.00
4,340.00

 

Imagine gold jumping from $1,800 to $2,039.40 in one day!

However, unless you think $1,800 is the level from which the mania starts, it's more likely we'd see a 13.3% advance (or something similar) from a higher starting point. We'd thus probably see gold jumping to $5,665 from $5,000, for example. And further, that would probably signal we're near the top.

Keep in mind that volatility worked both ways during the mania, so dropping from $4,000 to $3,472 or something similar is likely to occur as well.

Here's the same table for silver, with its biggest up day of 36.5% and down day of 18.5%.

Silver  Price
+36.5%
-18.5%
30
40.95
24.45
35
47.78
28.53
40
54.60
32.60
50
68.25
40.75
60
81.90
48.90
70
95.55
57.05
80
109.20
65.20
90
122.85
73.35
100
136.50
81.50
125
170.63
101.88

 

Can you imagine silver starting the day at $80 and hitting $109.20 before you go to bed that night? Something like that will probably happen at least once before this bull market is over. As with gold, though, that kind of movement is more likely to take place from a higher level, such as $100 or $125 (or higher?). And a fall like $100 to $81.50 will probably be part of the trend as well.

There are some definite conclusions we can draw from the historical picture:

  • First, if history repeats, or even rhymes, our biggest days of volatility are ahead. And they will be normal.
  • Second, big price fluctuations will be common as we enter the mania and approach the peak. In fact, when large daily movements become the norm, the historical record suggests we will be nearing the end of the cycle.
  • Third, since current volatility has thus far been lower than what was experienced during the final phase of the 1970s bull market, we are not in a bubble, nor yet in the mania phase, and nowhere near the top. Remember that the next time you hear some nincompoop spew bubble talk on CNBC.

What can an investor do with this information? Prepare yourself for bigger daily swings – in both directions. And buying on those outsized drops is probably a good strategy…

Because we now know what volatility looks like.

 

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Tue, 03/06/2012 - 21:19 | 2230622 Bay of Pigs
Bay of Pigs's picture

Fasten your seatbelts...

And hang on with Iron Fisted Resolution.

Tue, 03/06/2012 - 22:12 | 2230723 hedgeless_horseman
hedgeless_horseman's picture

 

 

 

My nomination for this month's Dumbfuck Journalist Award winner comes from The Atlantic...

 

How Much Gold Do You Need to Pay Yale's Tuition?  The Same as in 1900

 

"The only substantive conclusion I can think of to justify this post (really, I just thought the graph was cool) is that the picture is such a handy approximation of economic strength, partly because gold is a hedge you buy when you're afraid everything is falling apart."

 

http://www.theatlantic.com/business/archive/2012/03/how-much-gold-do-you...\

 

The picture is such a handy approximation of economic strength?  Really?  This poor sop of a writer, Derek Thompson, "oversees business coverage for the Atlantic's website," yet cannot comprehend that this "cool graph" is a handy approximation of our government's money printing, and not economic strength.  

Tue, 03/06/2012 - 22:24 | 2230781 nmewn
nmewn's picture
Derek Thompson... Education
  • journalism , political science and legal studies

    Medill School of Journalism at Northwestern University

Well, there ya go...ROTFLMAO!!!

Tue, 03/06/2012 - 23:40 | 2230983 trav7777
trav7777's picture

all I know is that silverbugz got blowtorched

Wed, 03/07/2012 - 00:32 | 2231062 tmosley
tmosley's picture

Everything you know is wrong, and you don't know anything else.

Wed, 03/07/2012 - 02:45 | 2231287 Deo vindice
Deo vindice's picture

+1 for my personal 'quote of the day'.

Wed, 03/07/2012 - 03:40 | 2231327 Bay of Pigs
Bay of Pigs's picture

Zero for fifteen. He's perfect. 

Wed, 03/07/2012 - 03:49 | 2231356 Sudden Debt
Sudden Debt's picture

No, it's good that he's here. If there where only silverbugs on ZH there would never be a conversation worht while.

HE'S PART OF THE TEAM! :)

Wed, 03/07/2012 - 02:42 | 2231282 XenoFrog
XenoFrog's picture

Because in the bizarro world of your self-delusion, every silver bug buys high and sells any time the price falls.

Wed, 03/07/2012 - 03:08 | 2231313 Hugh G Rection
Hugh G Rection's picture

Should have listened to the omnipotent Turd Ferguson about this.

 

He has always maintained that prices may go up, or down, that the market is controlled, but he is still able to accurately chart all the subtleties.

He also has a sixth sense for foreign policy, and accurately states that Government told the truth about 9/11.

Wed, 03/07/2012 - 03:18 | 2231328 Bay of Pigs
Bay of Pigs's picture

I got banned from there when I was #1 on his leaderboard.

Go figure...

Wed, 03/07/2012 - 06:55 | 2231489 deKevelioc
deKevelioc's picture

When you turn into a silverbug, Trav, I'll be sellin'.  LOL  Keep up the funny posts.  I've put some salve on my blow-torched behind.

 

Dom

Wed, 03/07/2012 - 09:33 | 2231678 tmosley
tmosley's picture

I wouldn't say that, as Trav claims to have been a silverbug for more than a decade.  

He is just a raging hypocrite.  He wants everyone else to sell their silver so that it all gets used up, making his more valuable, so he is the only one left with any money to buy the precious oil.

Wed, 03/07/2012 - 09:07 | 2231627 ratpack1968
ratpack1968's picture

Problem is, you aren't looking at the big picture. Money supply has exploded and though this could take a few more years to play out, fiat debasement cannot go on forever. Short-term fluctuations are meaningless when viewed from 30,000 feet. My basis in silver is in the low to mid single digits and fundamentals havent changed so torch away - I'll accumulate more. 

Wed, 03/07/2012 - 11:14 | 2232059 SilverDOG
SilverDOG's picture

ratpack1968

 

Yes, OVERVIEW! Most are completely incapable.

Never mind the 30 second info web, they are caught by and addicted to.

Wed, 03/07/2012 - 11:16 | 2232068 silvermaister
silvermaister's picture

trav you are from Texas ???

Probably working for Ben !!

Wed, 03/07/2012 - 12:14 | 2232334 Banjo
Banjo's picture

Considering most "silver bugs" don't trade the only thing the price move lower in the past hours and days is quite literally a buying opportunity.

 

Now traders of paper silver assets who were long yes they got hosed. But wholly different species.

 

Oh you are of feeble mind. That is a moron :)

Wed, 03/07/2012 - 03:33 | 2231340 BeetleBailey
BeetleBailey's picture

@nmewn...LOL!

Wed, 03/07/2012 - 05:39 | 2231432 ViewfromUnderth...
ViewfromUndertheBridge's picture

It is a cool graph...it shows gold has to double again before it approaches the 1980 peak and that is a real world example that makes a nonsense of the claim that $850 then is $2,500 now....given the spartan nature of edumacation back then I make it $8,500. 

Wed, 03/07/2012 - 07:35 | 2231526 jeff montanye
jeff montanye's picture

yes it is and yes it does, and that being the top assumes that the market doesn't overrun on its second (and greater?) bout with u.s. high inflation since ww2's immediate aftermath.  what with peak oil, peak debt, peak "printing" it might just be higher.  the maligned author goes on to make what imo seem reasonable if not highly original points: Investors shift their money into stocks and equity when times are good, driving down the price of gold (and driving up the gold-for-tuition figure). The graph's steady rise from the 1940s through the 1960s tracks a strong post-war economy. The collapse in the 1970s into 1980 tracks inflation and the '81 recession. Then the gold-for-tuition figure rides the 1990s' boom and goes back down the roller coaster after 2000.

Tue, 03/06/2012 - 22:03 | 2230730 NewThor
NewThor's picture

Fasten your seatbelts? That is so 1999.

It's more like shine your diamond water armor.

This March is the door hinge of 2012.

It's all about to get really FUBAR really fast.

MARS is near.

X 1.1 solar flare

War with Iran/Syria/Russia/China

the assassination of a major power player

and then the San Madrid.

How bright can your soul shine, bitchez?

 

Wed, 03/07/2012 - 03:35 | 2231342 BeetleBailey
BeetleBailey's picture

...yeah...but the weed's still good.....shhhhhh...don't let on

Wed, 03/07/2012 - 01:30 | 2231066 AbruptlyKawaii
AbruptlyKawaii's picture

LulzSec Tango Down

 

just a quick thread jack to let you all know that lulzsec and annon ops head "sabu" plus 5 others have been arrested by the fbi

 

the nominal leader of lulzsec and anonymous was arrested and flipped by fbi and ratted out all of his cohorts.

 

the dox reveal they sucked at serious hacking but as we all know excelled at bragging

http://www.foxnews.com/scitech/2012/03/06/exclusive-unmasking-worlds-mos...

I read about 10 articles on this plus the forbes article on kayla from a few months ago. above link has story.

EDIT: Re: Kayla, as mentioned in the forbes piece, many thought kayla was a teenage girl, ends up she was a he : Ryan Ackroyd

http://www.forbes.com/sites/parmyolson/2011/03/16/is-this-the-girl-that-...

and one Jeremy Hammond aka “Anarchaos,” of Chicago charged with the december stratfor breach.

 

Wed, 03/07/2012 - 08:45 | 2231601 ExpendableOne
ExpendableOne's picture

The perils of working in an "anon" environment.  By definition, you have no idea who's on the other end of that tweet, email, inadvertent confession....

 

 

Wed, 03/07/2012 - 15:56 | 2233229 AbruptlyKawaii
AbruptlyKawaii's picture

always always always put ego in check fly solo stay disciplined if you are going to go subversive, and another thing, these guys are supposed to be so called "hacktavists", hacking for ideals not for money,  but  "sabu" their "leader" ( I thought they were supposed to be leaderless ) who flipped on them and ratted them all out, he was selling stolen credit cards on his facebook account! doh!

 

Wed, 03/07/2012 - 01:10 | 2231129 Campagnolo
Campagnolo's picture

why are you not posting any more on your boss blog: Turd?

Wed, 03/07/2012 - 03:59 | 2231365 Bay of Pigs
Bay of Pigs's picture

Read above asshat. You were one of the worst trolls I ever saw there.

Tue, 03/06/2012 - 21:22 | 2230627 XenoFrog
XenoFrog's picture

Good thing I put on my big girl pants before buying all this silver.

Tue, 03/06/2012 - 22:09 | 2230742 NewThor
NewThor's picture

Well, if you hurt yourself carrying all that silver and need help taking your pants off.

Let me know.

I am AWESOME

Tue, 03/06/2012 - 22:59 | 2230883 chump666
chump666's picture

Worst pick up line ever.

That is a shocker.

But you got an uptick from me

Tue, 03/06/2012 - 23:09 | 2230915 CrockettAlmanac.com
CrockettAlmanac.com's picture

Uptick. Is that what the young folks are calling it these days?

Tue, 03/06/2012 - 23:27 | 2230956 chump666
chump666's picture

lol

Wed, 03/07/2012 - 04:04 | 2231371 NoClueSneaker
NoClueSneaker's picture

"... if u wanna get something really cheap, well, I'm yours .... "

Fixed the line fer u. ( And it works ).

Wed, 03/07/2012 - 06:53 | 2231488 StychoKiller
StychoKiller's picture

"Thor?  I can't even pith!"

Wed, 03/07/2012 - 01:20 | 2231139 RockyRacoon
RockyRacoon's picture

Great article....

http://www.zerohedge.com/news/morgan-stanleys-latest-commodity-thermomet...

Glad this info is making the main pages.

 

Wed, 03/07/2012 - 03:36 | 2231343 BeetleBailey
BeetleBailey's picture

You go girl! Follow your techs and you'll be fine.

Tue, 03/06/2012 - 21:23 | 2230628 DavidC
DavidC's picture

Fascinating! Thank you.

DavidC

Tue, 03/06/2012 - 21:23 | 2230629 saturno_v
saturno_v's picture

....and what popped Gold at the height of the mania was Volcker double digit interest rates......can you imagine Bernanke doing something even remotely similar??

Tue, 03/06/2012 - 22:11 | 2230756 SHEEPFUKKER
SHEEPFUKKER's picture

Da Treasuries are da bubble. 

Tue, 03/06/2012 - 23:05 | 2230902 NewThor
NewThor's picture

The Federal Reserve is the Bubbles.

Wed, 03/07/2012 - 01:31 | 2231168 TruthInSunshine
TruthInSunshine's picture

2 things: 

1)  If The Bernankinfreak did something similar, even remotely so, it'll be 1932 all over again.

2)  Where getting to the point where the actual, real market, which has been napping, comes into play again, and jacks rates despite The Bernankinfreak's best efforts to thwart it, and I guarandamntee it that the actual, real market wins. In which case, it'll be 1932 all over again. In fact, the illustrious duo of The Bernank & ECB have now all but guaranteed an interest rate shock that will be in the form of a sudden, many standard deviations from the mean, event, in the not too distant future. Think the U.S. downgrade last go around was consequential? That was nothing compared to what we're guaranteed to see in the next year.

 

The Bernank has been proclaimed a success so prematurely in terms of his 'mastery' of rates that it's sickening, when the piker brought a pen knife to a tank battle, and the sloppy journalists who declared him some sort of success are a bunch of 2nd rate hacks.

Wed, 03/07/2012 - 02:28 | 2231262 saturno_v
saturno_v's picture

 

TruthInSunshine

It always fascinate me to try to understand the "mechanics" of the collape...at least initially, in theory, Bernanke & Co (ECB, BOJ, etc..) can nominally keep the interest rates at whatever target they want, nobody prevent them to buy 100% of the bonds in circulation (the "great" Paul Krugman actually said exactly that....let the others dump, our Fed can buy all of it) but what happen at this point?? The currency drift towards toilet paper status with a meaningless bond market with basically only one buyer right?? Then at this moment Uncle Ben is forced to raise the interest rates to avoid the total annihiliation of the currency...am I correct?? 

Wed, 03/07/2012 - 02:51 | 2231297 TruthInSunshine
TruthInSunshine's picture

You have the gist of it, if I'm correct.

And it's probably not going to be be Bernanke that has to jack rates ala Volcker style, but a person brought in under a dire emergency, reminiscent of 1979, in response to the true market reinforcing the fact that it is King Kong, no matter what those who naively have fallen under The Bernank's cult of personality </sarc> believe about his omniscient powers.

So, when Americans literally squeal due to the vice grip of the inflation they feel, no matter how laughable the BLS or Fed Reserve opinions on the matter is, politicians will not be able to duck the public bitching rising to a fevered pitch for blood, and The Bernank will be gone, either of free will or mutiny.

Wed, 03/07/2012 - 03:43 | 2231347 BeetleBailey
BeetleBailey's picture

...and they'll blame it alllllll on George Bush dammit man! He installed the Bernank in the first place...with lots of help from GS, JPM as to whom would replace Herr GreenTongue......

 

Bush's 2nd term was monetarily run by BSB. He and Paulson must have a secret reunion somewhere remote, where they can laugh and openly talk about the unconstitutional, unelected power(s) they have/had.....

Wed, 03/07/2012 - 07:42 | 2231535 jeff montanye
jeff montanye's picture

yes bush will be blamed.  yet somehow imo obama will be mentioned as well.

Wed, 03/07/2012 - 10:11 | 2231807 ddtrader
ddtrader's picture

Carry the analysis to its endpoint - Holding the 2013 federal budget (a joke) constatnt, what would an average interest rate of say 6% on $16T of debt do to the ANNUAL US deficit??  Let's see if my math holds true...that's approximately $960BN of interest expense versus current federal tax revenues of roughly $2.8T at best.  This would lead to an even larger annual deficit (based on 2013 budget numbers) bringing the annual deficit to almost $1.8T, or 45% of the federal budget.  The end would come very rapidly. 

Wed, 03/07/2012 - 06:59 | 2231495 deKevelioc
deKevelioc's picture

There's a chance that gold will not only soar to heights now unimaginable, but it will stay high, as the financial system desperately needs stable currencies--backed by something, anything, tangible.

 

Dom

Tue, 03/06/2012 - 21:24 | 2230631 i_fly_me
i_fly_me's picture

weak -> strong

btfd

Tue, 03/06/2012 - 21:26 | 2230636 devo
devo's picture

Preaching to the choir. ZH readers hold their gold. You need to get this article in the mainstream media if you want it to have any effect.

Something not mentioned in the article: war = bullish for gold. A lot of different tensions right now.

Tue, 03/06/2012 - 21:27 | 2230638 Pegasus Muse
Pegasus Muse's picture

Good day to nibble a wee bit.  SLW, AG, CEF -- all of them on sale. 

Tue, 03/06/2012 - 21:33 | 2230652 Bay of Pigs
Bay of Pigs's picture

Blue Horseshoe loves Silver Wheaton

Tue, 03/06/2012 - 21:34 | 2230655 geoffr
geoffr's picture

If this was Apple stock instead of gold we would be saying it's a bubble that's bursting.

Tue, 03/06/2012 - 21:46 | 2230678 aphlaque_duck
aphlaque_duck's picture

I don't get why ZH hates on Apple so much. The one company that gets by on selling stuff people actually want instead of government welfare, and trades at 10x PE (ex cash). Sure they'll reach market saturation eventually but it's about the only American company that doesn't suck ass.

Tue, 03/06/2012 - 21:52 | 2230687 devo
devo's picture

If we're being honest, probably regret and jealousy for not buying it at $7.

Also, I think the media hype/schilling grate on people. The computers are pretty. No doubt.

Personally, I disdain all tech as they've become synonymous with subterfuge and exploting citizens' privacy. That's why I, personally, hate them. Tech = creepy perverts.

Tue, 03/06/2012 - 23:20 | 2230946 Burnbright
Burnbright's picture

I don't hate them but when you see almost everyone with a iphone or some kind of idevice it is rather weird when they also happen to be poor and on welfare. 

Wed, 03/07/2012 - 11:21 | 2232097 SilverDOG
SilverDOG's picture

Burnbright

 

Which means Apple IS govt assisted. 

 

Tue, 03/06/2012 - 23:24 | 2230951 UGrev
UGrev's picture

it's about the only American company that doesn't suck ass.

Tell that to the Chinese who have to sign anti-suicide contracts when working in an Apple factories. 

Wed, 03/07/2012 - 00:06 | 2231021 Bastiat
Bastiat's picture

Yeah and if you do commit suicide they'll sue your dead ass--or maybe sell your organs and call it even?

Wed, 03/07/2012 - 00:26 | 2231049 Non Passaran
Non Passaran's picture

They don't have to work there

Wed, 03/07/2012 - 08:50 | 2231607 ExpendableOne
ExpendableOne's picture

The Apple factories are bad, the other factories are much worse.  If it plugs into the wall or runs on batteries and is made in China, there's an excellent chance it was produced in a sweat shop environment.  

Wed, 03/07/2012 - 00:19 | 2231038 i_fly_me
i_fly_me's picture

iCult

Wed, 03/07/2012 - 04:12 | 2231381 NoClueSneaker
NoClueSneaker's picture

folklore.org

Wed, 03/07/2012 - 07:00 | 2231497 StychoKiller
StychoKiller's picture

Let's see Apple come up with a PC like this: http://www.frontiernet.net/~jimbot/allsparkproject.htm

Took only around 3 months to build at less than $1300!

Tue, 03/06/2012 - 21:53 | 2230701 mogul rider
mogul rider's picture

Let's all be friends and call it square.

I bought some today actually.

I'll buy some next week too. Though not till Greece fries. By then Abigail will have barbecued the hedgies and picked up all their contracts, their physical, their first borns, their mining shares, their Cadillacs and Bimmers etc. There won't be anything left when she is done. Just like the 10 other times these idiots come to play.

 

She just can't leave a flopping corpse. She needs to shoot it in the head.

 

 

Wed, 03/07/2012 - 00:20 | 2231039 kito
kito's picture

greece gets bailed out this year regardless..........

gold does not make new highs this year.....

no qe3 this year.....

stocks stay levitated this year.....

obama wins re-election this year....

no war with iran this year......

wsj buys out zh this year for undisclosed amount...... sorry couldnt resist..;)...............

Wed, 03/07/2012 - 01:05 | 2231121 Bolweevil
Bolweevil's picture

1-7 ain't bad
abc123FTW

Wed, 03/07/2012 - 03:10 | 2231322 robertocarlos
robertocarlos's picture

We get a percentage for posting, right?  Hopefully, you are correct.

Tue, 03/06/2012 - 21:37 | 2230658 GrinandBearit
GrinandBearit's picture

PMs probably going lower this week.  Nibble, but keep lots of powder dry.

Tue, 03/06/2012 - 21:45 | 2230675 mogul rider
mogul rider's picture

I don't think I've ever seen so many hedgies hit the pavement from 30 stories up on one day.

 

Wow what a work of art the banksters created this week.

There are days when you just go - WOW!

Right out of movie it was. The brash pumper pumps and get his head eaten.

Truly remarkable. I can't wait for Friday when Greece defaults.

 

It'll be orgasmically global in it's oscilation. Popcorn bought and ready.

 

 

Tue, 03/06/2012 - 21:55 | 2230682 mogul rider
mogul rider's picture

...

Tue, 03/06/2012 - 21:47 | 2230684 Floordawg
Floordawg's picture

With the current economic climate as it is, it's hard to imagine ever selling the PM's. But one of these days we'll have to pick a top... eerie thought.

Wed, 03/07/2012 - 00:23 | 2231045 Uchtdorf
Uchtdorf's picture

PMs stay in the ground...Pb stays locked and loaded...for a long time.

Wed, 03/07/2012 - 00:30 | 2231060 rosiescenario
rosiescenario's picture

Perhaps in your lifetime....but I doubt it in mine....

Tue, 03/06/2012 - 21:50 | 2230692 Downtoolong
Downtoolong's picture

Thanks to some Put options I sold on SLV last month, It's now looking like I may have it put to me in a few weeks. I am sooo looking forward to that day. Why? Because along with some SLV shares I acquired in a similar way ever since SLV has been rising from the $25 level I will then have enough paper to swap for a 1000 oz. brick of the real stuff. I've noticed that physical silver offers tend to disappear when the price starts falling, so, this may be the best way to acquire it. 

 

 

 

Tue, 03/06/2012 - 21:50 | 2230694 AUD
AUD's picture

Gold mania?

I think the real question is what stopped the $ panic in January 1980.

And no, I don't think it was Volker & his high interest rates, not exclusively anyhow.

Wed, 03/07/2012 - 00:28 | 2231055 Real Money Wins
Real Money Wins's picture

This link is about the history of the Hunt Brothers and has a good explanation of the events of the days from the late 70's and early 80's. And what when on in the PM markets.

 

http://www.rapidtrends.com/hunt-brothers-and-silver-story/

Tue, 03/06/2012 - 21:52 | 2230700 Hulk
Hulk's picture

I'm placing a wake up call for 2015...

Tue, 03/06/2012 - 22:05 | 2230732 chump666
chump666's picture

volatility is about to kill the momo player: man or machine.

Tue, 03/06/2012 - 22:06 | 2230735 El Oregonian
El Oregonian's picture

"the next time you hear some nincompoop spew bubble talk on CNBC"

Winning! Two CNBC classics in one day. Truely, what a BONUS.

Tue, 03/06/2012 - 22:10 | 2230749 The Shootist
The Shootist's picture

Mitt Romney, a selfish Imbecile entitled to the presidency.

http://www.youtube.com/watch?v=ecw1_Scpt2I

Tue, 03/06/2012 - 22:20 | 2230773 IronShield
IronShield's picture

Yawn...  More gold...  Keep stacking...

Tue, 03/06/2012 - 22:22 | 2230776 IronShield
IronShield's picture

And is that really the best they can do?  Come on man, hit me...  No dammit, I mean REALLY hit me.  pfffftttt...  That's it?  Buying more, keep stacking...  Sheesh.

Tue, 03/06/2012 - 22:22 | 2230777 Alexmai
Alexmai's picture

OT: As a repeat of what happened during the Great Depression, US imposes import duties on China: http://investmentwatchblog.com/as-a-repeat-of-what-happened-during-the-g...

Tue, 03/06/2012 - 22:24 | 2230782 plata pura
plata pura's picture

Hogwash! To lump silver and its lessor cousin gold in a scenario be ludicrous. Learn'd folk know wherst and how much au dwells above and below ground; that is not the case for sacred silver. The lunacy of filibuster will continue; however earth will only yield so much silver. In conclusion utility leading into the third industrial revolution will rule.

Tue, 03/06/2012 - 22:39 | 2230822 toadold
toadold's picture

I've got a wopping $25 a month going into a Gold ETF on an automactic mostly for the charts and stuff I get from the online brokerage, If they steal the gold I won't loose much. One thing that I've noticed that since my buy goes in at the same time every month, for some reason it hits at a low price.  I wonder if this is just luck or is something selling out just at the end of the month.?

Tue, 03/06/2012 - 23:11 | 2230918 Hansel
Hansel's picture

If you want a somewhat tinfoil response... I think it is because the PTB don't want gold to show gains on monthly brokerage statements.  'They' sell gold at the end of months, quarters, and at options expiration/first day notice.  Gold appearing as the obvious best asset versus stocks or bonds would be a problem for the government reliant on issuing debt and liquifying pensions/401ks.  But that's just a tinfoil theory...

Wed, 03/07/2012 - 01:14 | 2231133 toadold
toadold's picture

I keep lots of tinfoil on hand since I dropped my Medicare Advantage plan and went off my meds. 

Tue, 03/06/2012 - 22:41 | 2230827 Hoody Who
Hoody Who's picture

NewThor, I saw you mention that 1.1 solar flare in your comment, we just had a X5.4 about an hour ago.

Tip, put your loved electronics in your microwave oven.  It's like a Faraday Cage.

In the meantime, BTFD's!!!!!!

Keep stacking and stay strong!!

Tue, 03/06/2012 - 22:52 | 2230857 NewThor
NewThor's picture

X 5.4?

No way. That'd bake everything.

Checking the NASA SOHO LASCO cameras. Don't see anything.

 

Tue, 03/06/2012 - 22:42 | 2230829 AgShaman
AgShaman's picture

Volatility is not the enemy....it is your friend.

Churn n Burn Baby!....the Cannonballers like the volatility

 

Tue, 03/06/2012 - 22:50 | 2230850 Gringo Viejo
Gringo Viejo's picture

Paper Cocksuckers! (no offence to legitimite cocksuckers) .

Wed, 03/07/2012 - 00:42 | 2231083 Indrid Cold
Indrid Cold's picture

Yuck... you could get a nasty paper cut sucking paper cocks.

Tue, 03/06/2012 - 23:19 | 2230941 Silveramada
Silveramada's picture

SO much fun ahead...  

Tue, 03/06/2012 - 23:54 | 2231001 cnhedge
Wed, 03/07/2012 - 00:22 | 2231040 Non Passaran
Non Passaran's picture

I don't think so, but let's wait and see.
I expect silver to drop close to 30 and gold to high 1500's.
I haven't bought since 1560 or so, so I look forward to it.

One thing that the article didn't mention is whether paper gold can survive the mania phase. Back in the 80's we didnt have PM ETFs. Paper gold and silver should crash before max volatility hits us and that means wild gyrations should be bigger this time around (and happen before the peak). For now I don't think we're close to that point yet.

Wed, 03/07/2012 - 00:27 | 2231042 Long-John-Silver
Long-John-Silver's picture

Eventually Gold and Silver will reach an infinite value in USD as all fiat currency's before it have done. Take the Weimar Republic Mark as a perfect example. 

Imagine what it's going to be like when 1 Gold American Eagle = $50,000,000,000,000 USD.

Wed, 03/07/2012 - 00:32 | 2231063 bardot63
bardot63's picture

Clark and Casey never seem to include cartel manipulation in their assessments. The guy on the street doesn't trade the way these charts show.  The industries who need silver do not trade this way.  The sovereigns who may or may not be amassing silver stocks do not trade this way.

The Bullion Banks trade this way.  The brain dead futures/options guys trade this way.  Take a look at the news over the weekend of the reviving of PAGE.  Check Maquire and Naylor-Leland.  That's what's going to smooth out silver and gold trading -- competing for exchange business.

Wed, 03/07/2012 - 00:48 | 2231093 slewie the pi-rat
slewie the pi-rat's picture

always, with PMs, learn about the local market and plan your purchases carefully

if you are selling, you're a damned fool!

Wed, 03/07/2012 - 01:21 | 2231147 toadold
toadold's picture

If Gold hits 3000 I'm going to sell about half. If CNBC starts recommending the purchase of PM then I'm selling everything. 

Wed, 03/07/2012 - 01:39 | 2231187 Bastiat009
Bastiat009's picture

It looks to me that that volatility is mostly to the downside. I have yet to see a $100/oz move to the upside.

Wed, 03/07/2012 - 02:23 | 2231255 HungrySeagull
HungrySeagull's picture

Be ready to trade either way.

Cash on one side, a Pile to keep and never sell on the other.

And another pile to trade.

http://www.zerohedge.com/news/2012-10-06/parity-goal-2012-new-metal-bugs

This should be easy enough to understand where I am coming from.

I have already started placing a Ask or a Bid sometimes before bed or work etc. Who knows? A few hours or overnight might put me in a better position.

They say you will be tempted if Silver had a 35% erection from 50 dollars to 78. I will sell some of the goddamn things as soon as Kitco turns into a cliff and hopefully lock in at least a 10 dollar gain per ounce.

Same with gold. But hundred dollars or more to "Fish" out of the rapid waters rushing over the rocks.

Always accumulate, always buy low and sell SOME high. Never all in because if you do....

The waters might recede straight out leaving you naked in front of the Tsunami while you wonder how in hell did you wind up with so little cash and unable to do anything but go home?

If you are trading Paper Gold and Paper Silver.... GTFO and BURN IT.

Get physical and get delivery. The US mail will never keep up however your orders will stand the moment they execute.

Wed, 03/07/2012 - 04:13 | 2231378 geekgrrl
geekgrrl's picture

I have to say I'm really tempted to get into the ETFs and cash in on these volatility swings. I've never invested in any market, but this article is very persuasive because it's hard to argue that volatility will be decreasing any time soon.

However, I disagree with the author that our situation is comparable to the late seventies/early eighties in that the debt of the US government is comparable to the GDP of the country now, whereas back in 1980, the GDP/Debt was at an all time maximum. Plotting GDP/GFDEBTN at FRED shows that the GDP/national debt is about to go below 1. This is a whole new world with no resemblance to the world as we have known it. Once we pass into negative returns on further debt (and it could easily be argued we have been there for a while), then we have truly entered the death spiral, and the system will eat itself alive.

Wed, 03/07/2012 - 05:26 | 2231425 Jash
Jash's picture

Will be adding 22oz of physical Ag in the morning. Haven't had the cash to really stack this year, but a little here, a little there. One drop raises the ocean.

Wed, 03/07/2012 - 05:41 | 2231436 Mattress Money
Mattress Money's picture

What is better to buy buillion or coins? I was told coins.

 

Wed, 03/07/2012 - 05:41 | 2231437 Mattress Money
Mattress Money's picture

What is better to buy buillion or coins? I was told coins.

 

Wed, 03/07/2012 - 14:40 | 2232931 HungrySeagull
HungrySeagull's picture

I like American Silver Eagles and American Gold Eagles.

When the piles get heavy, I sell enough to get a bar. Or simply Buy Plat Eagles and Gold Eagles.

Wed, 03/07/2012 - 05:49 | 2231441 YouThePeople
YouThePeople's picture

I say the shiny one. Listen to good music. Don't let life slow you down.

Wed, 03/07/2012 - 06:12 | 2231455 jmcadg
jmcadg's picture

What this article doesn't account for is the complete loss of faith in fiat. As LJS alluded, this will make these future swings seem like nothing.

Silver and gold are 'precious' metals, once the paper bullshit is over they will command their true value and they will stay up there. You won't see $33 silver and $1677 gold. And you won't want to trade them for worthless paper. You'll be deciding on physical purchases from a physical asset.

When property really tanks, then you'll have an option to use your stack.

Wed, 03/07/2012 - 07:41 | 2231533 overmedicatedun...
overmedicatedundersexed's picture

S Bassey- had a great hit way back when..do you remember? I love only gold. the other hit back then was BEN a song about a rat..very fitting.

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