Silver price when markets dive - immediately up or down?

[FTYBR]

Firstly, before I ramble on about silver prices and the markets - just thought I'd state I hold physical and accumulate fairly regularly whenever I'm able to with monthly income. However, I have some 'dry powder' for likely future events to take advantage of falling paper prices.

 

I gather from a lot of posts on here that most people expect a market correction/crash/drop or even prolonged bank holidays/bail-ins at some point in the future for whatever reason.

 

There's also a general consensus that in a crashing market, or whilst the economy is in a panic, people will rush into precious metals as a safe haven/wealth preservation. The result, higher PM prices.

 

Although over the long term I agree, over the short short term/immediate aftermath, my feeling is quite different.

 

There are far far more holders of paper metal than physical (50 to 1 / 100 to 1?). The holders of the paper contracts, unfortunately for us also have big positions in equity markets.

 

In a falling market, or during a significant event - investors tend to liquidate positions in all areas - whether for liquidity or margin calls. Consequently, this can have an effect of dragging down the price of paper metals along with it.

 

Having looked at the 2007/08 market drops, there did seem to be short term periods where both FTSE100 and silver price both dropped fairly significantly.

 

On that basis, I do think that in the event of a flash crash or severe market sell off - if the paper prices get smashed also, we'll have a very short window to accumulate physical metals at lower prices.

Obviously this could well happen when PM prices are much higher than today and therefore irrelevent for buying in lower.
The other issue of course is would there be any availability of physical at that point??

So just wondered if anyone else has thought about this? Or am I just thinking too much! Are people here keeping cash on the sidelines for future bargain hunting season, accumulate steadily or are you going all-in with whatever cash you have - whenever you have it!

 

Disclaimer: I know in the long long run, it's ounces in hand not £ per oz that matter. But until fiat ends...

[craig12]

my own opinion and it is only my opinion , I feel its only worth buying at lower than these prices, and as I mentioned in the cypruss thread theres only so much fiat currency you have anyway cos you probably need cash in the bank to run your life/savings etc, so I am of the belief  that I am buying silver on strong falls,  and using stackiing now as a bit of fun , the goverments will win every time,

I am of the strong view that if I have to sell my silver one day  then paying high prices then vat then delivery , it would have to quadruple in price for me to get a meger return as I don't sell on e bay

so this is me like me or not  I never never want to pay a lot , some bullion ive bought at spot + 3% no vat privately

[motorbikez]

 I hold physical and accumulate fairly regularly whenever I'm able to with monthly income. However, I have some 'dry powder' for likely future events to take advantage of falling paper prices.

 

 

 

There's also a general consensus that in a crashing market, or whilst the economy is in a panic, people will rush into precious metals as a safe haven/wealth preservation. The result, higher PM prices.

 

 

 

There are far far more holders of paper metal than physical (50 to 1 / 100 to 1?). The holders of the paper contracts, unfortunately for us also have big positions in equity markets.

 

In a falling market, or during a significant event - investors tend to liquidate positions in all areas - whether for liquidity or margin calls.

 

 

 

The other issue of course is would there be any availability of physical at that point??

 

 

 

 

 

A few interesting points there FTYBR

 

Always wise to have a bit of dry powder and to buy/accumulate monthly and not worry about a few pence movement up or down.

 

In the event of a crash I don't think the average small investor with 10K in equities is going to rush headlong into buying PMs,they tend to panic and sell everything and stay in cash with what they have left.They do not bottom fish they usually watch like rabbits caught in a headlight while the markets recover 30-40% then buy back in so crystallising their losses.

 

You are right to point out if everything gets smacked down which is likely, would there be any physical availability,probably not much as dealers would either not sell or increase their margins.

 

Personally I'll just keep buying coins I like and buy the odd kruger and sov now and again but I won't be jumping in all guns blazing in the event of a crash nor will I sell my mining shares.

[Keithoil]

I agree with your comments.

 

In the event of a market crash for whatever reason there will probably be a downside initially but then (hopefully) there should be a recovery of sorts.

 

Would I sell no way, would I buy more, probably, all depends on the price and the severity of the crash.

 

I would keep my stack and watch oh so closely as events unfold.

 

Like a big cat stalking its prey. Just ready to pounce.

[FTYBR]

You are right to point out if everything gets smacked down which is likely, would there be any physical availability,probably not much as dealers would either not sell or increase their margins.

Come to think of it this is actually the most likely scenario. Suppose in an extreme event, this could lead to the splitting of paper/physical price. I doubt there'll be many selling physical if price suddenly drops...and yet quite a few big cats ready to pounce!