The Coming Blow-Off Mania in Silver Will Be Breathtaking

launch rocket verticalBy SD Contributor AGXIIK:

The coming move and mania in silver will be breathtaking and will resemble the Tulip & recent Bitcoin manias.
Silver might take 10 months to peak and 2 months or less to retrace much of its price increase. It might be a $100 billion market in the US.
The market will be completely overrun and choked with silver, yielding an inventory that might not bleed off for years. The price rise will be fast; the drop will be fast was well.  That’s the way this always happens when smart money gets in first and dumb money comes in last.
Getting out at that inflection point will be a doozy; the ride heady.   Nearly everyone will be sucked in with dreams of becoming silver millionaires. Those who bought at $30-40 will be vindicated.
The price rise will be a Rhino Horn in shape. When the price increase hits about 80 degrees from the horizontal axis, the peak will be reached in short order. It will look a bit like the national debt chart of the last 60 years. Parabolic and then some. 
The price peak will be reached.  Check your heart at the door as the euphoria will be intoxicating and dangerous for your financial health.

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It’s funny about all the precious metal price rigging. I exited the stock market 2 years, clean and sober–to avoid that casino.  After going pretty much all in by early 2013, here we are again, thinking there was some asset safe harbor, proven wrong and at the effect of the same ghouls who play the stock market. This time the leverage is even greater than the stock markets.
This will end sometime in the near future. Reversion to the mean is a nearly immutable force of nature. While I am confident that silver will go to $100 an ounce something that I state is that silver will probably not rise significantly past $100 an ounce.

At $100 an ounce silver, the miners will start puking silver after ramping up production or opening fallow mines, trying to grab the price rises while they last, avoid sales of their product at a set price, producing not just millions of ounces but potentially billions of ounces. Silver at $100 will produce an insane, frantic buzz and rush, a race to the silver dealers.  All those ads on TV will be doubled and doubled again. People will be standing in line 3 deep outside the doors, cash in hand, to buy buy buy. It’ll make the 1981 silver $50 an ounce rush look like a walk in the park. Don’t stand in the way of the last entrants in this rush. You will be trampled.

People are far far more desperate today than in 1981. Those were pretty tough times. Our present and coming times will be tougher by a large degree. Fortune favors the observant person in uncertain times.
Every miner who’s spent nearly 3 years eking out a living, trying to break even and stay alive, will see $50 and $100 an ounce but, like any farming operation– yes, mining is farming the earth (farmers are price takers not price makers) the average Joe will be buying hand over fist in a frenzy to scoop up the last ounce of silver (or gold) produced by the miners until oversupply causes prices to drop rapidly.

$100 billion in accessible silver (1 billion ounces) will mean the 100,000,000 people in this country with $1000 to buy silver will be desperate to buy something of value. They’ll end up with 10 ounces. Not much of a stack but for some people it will seem like a godsend. It’s in our DNA to know that silver is real money. I chose $100 because it will not make the average Joe insane. Joe will be nervous and anxious to buy some. It’ll make him much more aware of the need to stack. But he will still be fairly rationale, mostly.

$500 an ounce will cause people to go crazy.
1 ounce of silver? $500 an ounce? That’s insane.
At that price we’ll be forced to work within circumstances more grave that trying to figure out what to do with our $500 an ounce silver.
Bitcoin went to $1,000 from $10 per DIGI-FIAT unit. That aroused some attention but most people were not tuned into that currency.
Silver? Yes, everyone know that assets. It’s hardwired into our genome.
Before you know it, the miners will have caught up with the scurrying rush for precious metals to fill the pockets of the late arrival stackers. They will push more billions of ounces into a market that will become saturated. Average Joe will rush to the game, frantically bidding up the price to $80-100 an ounce, but unlike stackers who have always been very early to the long game, acquiring silver at $20-30 an ounce, Joe will be left holding the $100 ounce bag. This price game will become exhausted once the last dollar is played into an market seriously oversupplied.

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That’s the way this always happens when smart money gets in first and weak or maybe dumb money comes in last. It may not be the worst thing for Joe though, because silver cycles will help mitigate the damage of buying at the tops. And silver is real money; tangible, fungible, long term wealth.
Remember when Apple was $12 a share? How about $700 a share? What is Apple really worth? Can you eat an IPad?
Silver will buy highly valued commodities when Apple has seen a 75% drop in value.

When corn, oil, silver, copper, housing, wheat or any other commodity reaches a saturation point, the supply of that item overflows the bunkers, silos and vaults. With silver’s puny market, the price will peak then drop like a rock when the last dollar is invested. Housing took 10 years to peak and 2 years to drop. It was a $30 trillion dollar market in the US.

Silver might take 10 months to peak and 2 months or less to retrace much of its price increase. It might be a $100 billion market in the US.
The market will be completely overrun and choked with silver, yielding an inventory that might not bleed off for years. The price rise will be fast; the drop will be fast was well. The traders who fuel this upward rush while be there trading the metal downward. The new short trading profits will be seen at every price level.  Silver miners will be left with the worst of worlds; a price drop that ends with them dumping into a downward price cascade. The paper trading vultures will make billions in spite of everything.

There’s nothing wrong with us working with these tides. If they profit; we profit. There’s no sin in that. It’s just good business for the early physical adopters who don’t have billions in capital reserves to play the markets upwards and then exit. Just because someone owns physical does not mean they signed a suicide pact with the market price as it goes down sharply.

Getting out at that inflection point will be a doozy; the ride heady. Even we stackers will probably do like we did 3 years ago when silver’s rise was a whirlwind. Nearly everyone got sucked in with dreams of becoming silver millionaires based on predictions of $200 silver. The train fell off the tracks with that one.
One good thing about this 3 year news cycle is that it brought hundreds of thousands of people out of their sleep walking mode, thinking about precious metals; working to increase their knowledge and being ready for the next stage. Those who bought at $30-40 will be vindicated. That was a lesson well learned and alone may have made the ride thus far worth the price of admission.

Call it our Phd in PMs. We all learned the hard way.
The cooler heads, like those well informed people on this site and others, will offer sage advice as to exit timing. The blog rolls will be filled to overflowing with advice. Some of it’ll be worth reading.

Getting out of silver at a point before the collapse in price will take some doing. On a personal level my plan is to sell maybe 20% of my stack, pay off the mortgage to reduce counterparty risks and have some cash left over. Then trade 35-50% into gold for easier stacking, figure out what else is worth buying or just hold the rest for long term purposes. By the time silver hits $100, the rest of the story will play itself out to our satisfaction.

Be assured, silver will be much more of a rocket ride since the market is so incredibly small. Demand will be so equally high. You all know how that evolves. Like anything else, the price peak will be reached.  We’ll be happy happy happy. Wariness is a wise policy in times of euphoria. Check your heart at the door as this euphoria is intoxicating; not good for your financial health.

The price rise will be a Rhino Horn in shape, giving the informed some good indications of when to exit. When the price increase hits about 80 degrees from the horizontal axis, the peak will be reached in short order. It will look a bit like the national debt chart of the last 60 years. Parabolic and then some.
Maybe moving to gold at that time will be wise since the yellow metal will assume its rightful status as the backer of currency in some countries and in the pockets of the people. Look east. 1,300,000,000 Chinese and 1,250,000,000 Indians can’t be all wrong. 40% of the world’s population senses something is wrong and like all living things that sense the coming storm, they seek higher ground.  Its little brother will tag along like a faithful companion.

Real money will work its way into the consciousness of the people.
Precious metals will assume their rightful status with the people as an asset of real value.
Some big investors in the paper paradigm will damaged, maybe beyond repair.
The owners of physical precious metals will be rewarded.

These are my speculations.
I based them on the rise and fall of all commodities, particularly ones like gold, silver and monetary copper with their 6,000 year histories. The move and mania will be breathtaking; almost Tulip Bulb or Bitcoin-like.
Other than food, nothing else has been around long enough to see the fruits of its changes in values like precious metals. Time and current events are on our side. Those attempting to control the prices are like King Canute telling the tides to stop their progress.
I may be wrong in some aspects but they are small in nature.
I am confident that time, tides and human nature will bear fruit for those with the patience to see this through.
Stay the course.
You will be rewarded for your wisdom of investing in silver and gold.

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