What is happening to the silver price?

It's May 15, 2012, and people who read charts have been saying for a couple weeks now that gold and silver "don't look good" and are in a "downtrend."  Some might say they are crashing, because the declines to be getting faster and without offsetting "up days."  The declines are not limited to gold and silver, but are affecting most commodities including oil, grains, base metals, gasoline (but not natural gas so much, which is rebounding now from a half-decade of crashing on its own).  This seems kind of like in 2008; a forced liquidation by parties that were invested with leverage is crushing the price as they unwind.  But as this happens, and gold and silver prices get kicked down the staircase and through the floor into the basement, don't forget to buy them.

Anyone who sat through 2008-2009 for metals saw the price climb from the dizzying heights of $15 / ounce for silver in late 2007 to $20 at its peak in the spring of 2008.  Then it backed off and, in the fall, went off a cliff like everything else (except US Dollar and T-Bills).  Silver bottomed out around $8.80 per ounce before coming back into the teens in early '09 and from there stagnating up to $16-18 again before, in about September, 2010, it began its meteoric rise to $49 by April, 2011.  Since then it has meandered down through the $30's and now to its happy home this evening at $27.80's.  Silver has never spent much time in the $20's.  It has spent a lot longer in the $teens, and the $30's.

Precious metals pundits, commentators, "renowned" investors on TV, etc. seem to always be saying now is the time to buy gold and silver.  Especially now, they might say, because both have been beaten so hard.  Any why?  Not just because of the historic value, maybe, but because of inflation and debasement of the paper currency!  "Fiat" currency, and inflation away of the value of savers' saved savings are the evils these proponents of buying gold want to protect you from.

But you still need cash, for example, just to pay your current expenses and in case of emergency.  And if you want to buy gold and silver, what do you think these guys selling gold and silver want from you?  They want your evil paper fiat currency, of course.  Or they'll even accept payment by credit card, so it's just digits in some file. 

Just because the paper currency system might fail and each dollar's value is indeed being inflated away, that is not a straight line proposition.  In other words, despite that longer term trend of the dollar losing its value, we are in the midst every year since 2010 of the EURO CRISIS, which has been PUSHING UP THE VALUE OF THE DOLLAR compared to all other world currencies, and even gold and silver.  In other words, while savers are not earning anything on their saved cash savings in the USA, the value of their dollars is getting better, not worse... at least for now.

We tend to agree that gold and silver are "worth" having. Gold and silver have been considered valuable in tiny quantities compared to other things people want (food, productive animals, work animals, vehicles, clothing, tools, etc.).  Most governments including in the USA are indeed inflating the currency supply and thus debasing the value of all preexisting dollars that savers saved.  That stinks, and owning some physical precious metal is a way to protect part of your saved wealth.  So we don't quarrel with the idea that people should become aware of the historic and worldwide value of precious metals as part of the total universe of things they invest in.  We also feel like now is not a "bad time" for someone to start, or for us to add to our pile. 

So don't forget to buy as silver and gold tank here.  Everything depends on your budget.  But remember, it is nice to get excited about the price dropping because you are happy you can buy gold or silver at an excellent price.   You cannot have this happiness unless you have EVIL PAPER FIAT CURRENCY on hand when the price falls even lower in order to buy more of the good stuff.  So, don't spend it all at once.  Don't run out of cash.  We want to see a big smile on your face and a big box coming to you in the mail full of silver when it hits $16 per ounce again.

May 2012 Silver Chart