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15
Feb
2012

James Turk calls for silver to double in 2 to 3 months

by Fred Marion

James Turk has a reputation for making outlandish predictions. He was practically alone in his calls for gold to hit record highs during the traditionally slow summer months last year, but the yellow metal did just that.

Of course, Turk’s not entirely an impartial observer. He’s the founder of GoldMoney, a company that gives consumers a way to buy goods and services in gold rather than cash (online at GoldMoney.com).

He has a vested interest in driving consumers toward precious metals. But, it’s always admirable when someone lays out public predictions – particularly when they name specific price points and time frames. Turk did just that two weeks ago when he said he expects silver to double over the course of two to three months to $70 an ounce.

That monstrous climb won’t start until silver can break out above $35 an ounce, Turk believes. And the metal has gotten very close to that $35 mark recently. It closed above $34.50 for the first time since October 2011 last Wednesday.

Could the pendulum be swinging from gold to silver? Citigroup analysts seems to think so. A few days ago I detailed their predictions that the gold-silver ratio is about to undergo a shift in my post Silver ready to outperform gold.

“There is a bubble today, but it is not gold,” Turk wrote last week on GoldMoney. “It is the debt instruments of the US government and indeed, other governments that have also made far too many financial promises. Many of these promises will be broken and many debts repudiated, but most people do not understand or refuse to accept this reality. Ignoring prudent financial analysis and even the lessons of history, they still believe government debt is a safe haven.”

Once investors wake up to the realities of our country’s debt situation, perhaps they will pile into metals. Whether or not they push silver up 100 percent in two months is yet to be seen, but we have to admit the market’s done well of late. It climbed 15 percent in January. Let’s keep an eye on that $35 an ounce mark and hold Turk to his word.

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12
Feb
2012

Citigroup: Silver ready to outperform gold

by Fred Marion

Citigroup analysts sent a note to their clients last week arguing that silver looks undervalued compared to its pricier yellow cousin, gold.

Their reasoning? The gold-silver ratio is tilted too far toward gold. “The 200-day (gold/silver ratio) moving average is at 47.64, which we suspect will be tested,” analysts wrote. As it stands right now, the gold-silver ratio is hovering around 51.

During the height of the precious metals bull market 30 years ago, the gold-silver ratio fell as low as 16. Think of it like a pendulum that’s set to swing back toward silver. Per Citigroup, if silver can manage to close out a week above $36.55 an ounce, the metal could quickly spike higher toward $45.30 an ounce (a jump of 35 percent from current levels).

Retail investors are showing they like silver coins despite higher prices. Sales of American silver eagles were up to 615,000 this week (above the prior week’s 505,000). For the entire year, the Mint’s sold more than 6.8 million silver eagles.

The big question for precious metals prices going forward is how the story in Greece will play out. Draconian austerity measures could save the Eurozone from debt contagion. Or it could lead to social unrest that just might topple the current regime there. “Austerity measures are like shoes that are too tight,” an opposition leader said recently. “Sooner or later, you want to kick them off.”

Investors seem split on whether or not saving Greece from default is bullish or bearish for metals. Newsletter writer and economist Dennis Gartman is staying in gold as long the turmoil in Greece doesn’t undermine investors’ views of the metal as an alternative store of value (per Barrons).

If investors start growing confident that the worst of the Eurozone’s problems are behind them, though, that could push traders out of safe haven metals and into riskier assets like stocks. Should that happen, look for gold and silver mining stocks to possibly outperform the metals themselves.

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30
Jan
2012

Top 10 silver price predictions for 2012

by Fred Marion

While gold was up more than 10 percent in 2011, silver prices quietly declined for the year. No one wants to remember that fact. What everyone does remember, though, was the sizzling hot spike the metal had when it shot to nearly $50 an ounce in April. For the entire year, though, silver was actually down 10 percent, falling from $31 an ounce in January to $28 an ounce in December.

Silver’s fireworks saw the metal rise 80 percent in three months last spring. When prices collapsed, the bottom fell out just as quickly. The metal crumpled 30 percent in five days! That rapid sell-off burnt a lot of investors, and they’re likely hesitant to re-enter the market.

Here’s what the pros think in a round-up of the Top 10 silver price predictions for 2012 from various sources around the web:

1) $33.21 an ounce. A Reuters survey of 45 analysts predicts silver prices averaging $33.21 an ounce in 2012 and $35 an ounce in 2013.

2) $34 an ounce. With low interest rates from the Federal Reserve, James Steel, analyst at HSBC, tells TheStreet he sees silver prices averaging $34 an ounce in 2012. He believes increased industrial demand could make up for any price weakness.

3) $60 an ounce. David Morgan, the publisher of the Morgan Report, has called for $60 silver by year end. “The key is to get through that $50 psychological barrier,” Morgan told Hard Assets Investor recently. “It’s probably going to take a couple of tries. And I do believe at some point it will. Once it does that, you could see silver go up from $50 to $60 in a matter of two weeks.”

4) $44.49 an ounce. A survey of members of the London Bullion Market Association (LBMA) shows they’re anticipating an average silver price of $33.98 an ounce in 2012 with a year-long high of $44.49 (that would be good for a 30+ percent gain on the year), per MineWeb.

5) $32.70 an ounce. Credit Suisse lowered their silver forecast from $33.70 per ounce to $32.70 per ounce (per SilverInvestingNews), but they did expect that a growing appetite for risk among investors could help the metal rise higher.

6) $35.48 an ounce. Morgan Stanley slashed their 2012 prediction for silver prices in 2012 from $50 an ounce to an average of $35.48 (per SilverInvestingNews). That’s a cut of nearly 30 percent.

7) Between $22 and $45 an ounce. Barclays believes silver will average $32.50 an ounce in 2012, per CommodityOnline. They also believe the metal will demonstrate more of its infamous volatility by touching a low near $22 an ounce and a high of $45 an ounce.

8) $100 an ounce. “With gold having passed $1700 (twice the 1980 high of $850) already … it stands to reason that $100 (twice the 1980 high of $50) silver is achievable,” Hubert Moolman writes on SeekingAlpha. Moolman argues that silver shadows moves in gold by several years. Just as gold broke through all-time highs four years ago, he thinks silver’s poised to do the same in 2012.

9) $50-$99 an ounce. Newsletter writer Patrick A. Heller gives 50/50 odds that we’ll see silver prices between $50 and $99 an ounce in 2012, per CoinUpdate. That’s by far the most likely range he believes the metal will land in by the end of the year (although he does give 14 percent odds silver will close out 2012 between $25 and $49 an ounce).

10) THE OPTIMIST: $200 an ounce. Gijsbert Groenewegen of Silver Arrow Capital Management told Forbes last week that a crumbling dollar could thrust silver up to $200 an ounce (per IBTimes).

I fully expect gold and silver stocks to outperform bullion prices in 2012. Check out our new book Top 500 Gold and Silver Stocks to learn more about our favorite miners.

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29
Jan
2012

Top 10 gold price predictions for 2012

by Fred Marion

The gold market got a powerful jolt last week when the Federal Reserve announced plans to keep interest rates at historic lows through at least 2014. It was a sign, perhaps, that the gold rally has more than a year’s worth of climbing to do (until the Fed gets serious about combating inflation). The news has helped push gold prices up 10 percent in January alone, and that’s got us wondering what’s in store for the metal in 2012. Let’s take a look then at the Top 10 gold price predictions for 2012:

1) An average price of $1,765 an ounce. A Reuters survey of 45 analysts predicted an average spot gold price of $1,765 an ounce in 2012. That’s 14 percent higher than last year’s average spot price for gold.

2) New all-time high for gold. After getting pressed in an interview with the Washington Post, Puru Saxena, chief executive officer of Puru Saxena Wealth Management, didn’t name a price target for gold, but he did say: “My best guess is the price of gold could reach a new high.”

3) $2,300 an ounce. That prediction comes from Peter Schiff, a former U.S. senatorial candidate from Connecticut. He believes 2012 will be the year the dollar finally starts to “fizzle” out (per ETFDailyNews). “We’re a long way from a blow-off top that you would get at the end of a bubble,” Schiff said in the interview. “We might eventually get there, but we’re years away and thousands of dollars an ounce away.”

4) $1,845 an ounce. Global banking giant Morgan Stanley revised their gold price predictions lower on Jan. 17. They believe gold will average $1,845 an ounce in 2012.

5) $1,681 an ounce. Investment bank Goldman Sachs was more bullish than Morgan Stanley. On Jan. 9, they were predicting gold would hit a new record of $1,940 an ounce in 2012 (per Bloomberg). Two weeks later, they were revising that figure down to $1,681 an ounce in 2012.

6) $1,892 an ounce. Barclays Capital believes the yellow metal will surge 21 percent on the year. That said, they also believe the gold price could go even higher by Q3 2012: “Gold is likely to reach a new all-time record high above $2,000 per ounce during the third quarter of 2012.” (per IBT).

7) $1,450-$1,750 an ounce. Jeffrey Wright, senior research analyst at Global Hunter Securities, believes gold will remain range bound for the year between $1,450 and $1,750 an ounce (per NuWireInvestor). He echoes many other analysts, though, in arguing that we will likely see a sprint north of $2,000 an ounce in 2012 at some point during the year.

8) $1,000 an ounce. The bulls are tempered by Jon Nadler, a senior analyst at Kitco.com. Nadler argues gold will hit $1,000 an ounce before it hits $2,000 an ounce. “The question will remain for 2012, to what extent will investment demand be able to remain the principle driver and continue to attract interest from speculators and investors,” Nadler told TheStreet.

9) $3,000 an ounce. John Ing of Maison Placements Canada Inc. expects to see gold at $3,000 an ounce in 2012. “There’s just a lack of compelling investment alternatives,” Ing writes.

10) A Long-Term Prediction: $3,600 an ounce. Frank Holmes, CEO of U.S. Global Investors, believes gold prices could double in the next five years to $3,600 an ounce (per NuWireInvestor). “Does anyone really believe in the long term strength of the U.S. dollar … We’re just going to have to live with this volatility for another 12 months,” Holmes told NuWire.

The biggest beneficiary of high gold prices in 2012 could be gold and silver mining stocks. See which companies we think our poised for success in our BRAND NEW book: the Top 500 gold and silver mining stocks.

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21
Oct
2011

$10,000 gold doesn’t sound that crazy anymore

by Fred Mason

I’ve been listening to The Financial Sense Newshour with Jim Puplava for about two years now. The host is unabashed about his bullishness on gold, but he backs it with logical arguments, and it’s been difficult to argue with his stance that gold is going to keep going up until we see some new form of non-fiat currency.

It wasn’t until this week, though, that I heard Mr. Puplava actually give a price target on the metal:

“We aren’t even close to where I see the price of gold and silver going. We’re probably in the second phase of this bull market. Wait until we get to the third phase of this bull market where I think you’re going to see prices closer to $10,000. I know people probably think I’m nuts saying that, but I can make all kinds of fundamental reasons why we think that’s where we’re eventually going to end up.”

Mr. Puplava attributes the rise in gold to one thing: money-printing at, not just the Federal Reserve, but by central banks and governments around the world.

“The debt issue, as Reinhart and Rogoff have told us in This Time Is Different, it takes about 10 years to work those things off.

“We’re only four years into a 10-year debt cycle work-off. So we have another six years to go, and does anyone believe that governments are going to stop printing money? I mean just take a look at what they’re talking about bailing out, back-stopping, quantitative easing, they have all kinds of fancy names for it, but we all know what happens when they do this kind of thing.”

It turns out Jim Puplava’s not the only one who thinks we could see gold at $10,000 an ounce. Nick Barisheff (the CEO of Bullion Management Group Inc.) is actually working on a book titled “$10,000 Gold – Why it will get there sooner than you may expect.”

“Unless current monetary policy is drastically changed, it will almost certainly rise to $10,000 an ounce and beyond,” Barisheff writes (per ResourceInvestor).

He believes three facts are contributing to gold’s ongoing march toward five digits:

  • The loss of purchasing power of global currencies
  • The inflationary effects of money creation
  • Irreversible trends (an aging population, peak oil and outsourcing) will continue to cause gold to rise

Barisheff goes onto point out what I think most outsiders fail to miss when they’re thinking about gold: it doesn’t rise in value. It’s only going up in price because the value of our dollars, euros and yen are falling.

And, if you fall in their camp, you’ll probably come to the same conclusion they have: the fiat currency system that President Nixon implemented in 1971 is on the verge of collapse. And until we get a new currency, gold, silver and other hard assets will be the only vehicles we’ll have to protect the assets we’ve a worked a lifetime to accumulate.

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08
Oct
2011

Four signs gold prices are being suppressed

by Fred Mason

Recently, I blogged about why the U.S. government has a vested interest in keeping gold prices low (see my post What is gold price suppression? for more). Today, I offer up four signs that gold price suppression is actually happening:

1) Swiss miss? One of the strangest impacts of the news that Switzerland was pegging its currency to the Euro was the downward pressure it put on the price of gold. Before the news, the Swiss franc was generally regarded as one of the last strong currencies in the world, and the fact that it would no longer serve as a safe haven should have pushed gold up according to Hinde Capital CEO Ben Davies.

“Why was (gold) selling off just ahead of a really bullish announcement?” Hinde asked in an interview with King World News. “You have to believe that there was some coordinated action. When I say that, the central banks will all have been in on knowing ahead of time that the Swiss were going to announce this. So there was central bank selling because they really didn’t want the price of gold to skyrocket on what is incredibly bullish news for gold.”

Even Goldman Sachs’ head gold trader Zak Dhabalia was perplexed. “The immediate aftermath was in complete contradiction to prior recent episodes of intervention and what anyone would have expected,” he said (per Fool.com). “Instead of spurring a further gold price rally on the basis that it was one of the few remaining safe haven ‘currencies’ we saw a USD$50 collapse in minutes.”

2) Collusion among central banks. GATA.org is one of the most forceful advocates for transparency in the gold markets. And they’ve been trying for years to draw attention to comments by William S. White, former head of the monetary and economic department at the Bank for International Settlements. At a convention of central bankers in Basel, Switzerland, in 2005, White declared that a major purpose for cooperation between central banks is “the provision of international credits and joint efforts to influence asset prices – especially gold and foreign exchange.” GATA’s went as far as taking out a $264,000 full-page ad in the Wall Street Journal re-printing White’s comments (along with a few others).

3) Gold margin requirements. I constantly go back and forth on whether or not the COMEX is attempting to manipulate commodity prices by raising and lowering gold and silver margin requirements. On the one hand, the COMEX exists to make money for its parent company, the CME Group. When prices get too volatile the CME Group tries to shake out weak hands (and protect itself from losses) by raising margin requirements.

On the week of Sept. 19, though, news leaked out that the COMEX would be raising margin requirements on gold at the close of trading on Sept. 23. This information got out even after gold prices were already falling rapidly (and the rumors likely accelerated those losses dramatically). Having followed the gold and silver markets closely for four years, this is the first time I’ve heard of the COMEX “leaking” news about margin requirements. Granted, it could have been an accidental leak by a rogue insider, but the whole thing feels fishy – particularly since it helped contribute to one of the biggest sell-offs in gold since 1987.

4) The Chinese have figured us out. It’s interesting that gold price suppression gets sneers in the U.S., but the U.S. embassy in Beijing was alarmed enough by a newspaper editorial in China to forward it to the U.S. State Department. That happened in 2009 (according to a cable leaked by Wikileaks). The Embassy forwarded on the following snippets from the editorial that ran in a State-sponsored newspaper in China:

“The U.S. and Europe have always suppressed the rising price of gold. They intend to weaken gold’s function as an international reserve currency. They don’t want to see other countries turning to gold reserves instead of the U.S. dollar or Euro. Therefore, suppressing the price of gold is very beneficial for the U.S. in maintaining the U.S. dollar’s role as the international reserve currency.”

It’s important to remember why central banks want gold prices suppressed: they need investors to maintain their faith in fiat currencies. Without that faith, an economy collapses, and few things erode faith in fiat currencies like a rapidly rising gold price.

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07
Oct
2011

Short-term gold and silver price targets

by Fred Mason

Despite a two-day rally in stocks and precious metals, I’m still bearish in the near-term (see my post 8 signs we’re headed for a bear market in stocks for more). One of the biggest indicators that we’re in for a rough patch is the rapid climb in the volatility index (the so-called “fear gauge” for the stock market). The VIX spiked early in August and it’s yet to taper off:

(Click to enlarge)

Typically, gold and silver act like hedges against market uncertainty, but the recent turmoil in stocks has me feeling like this isn’t typical market uncertainty. It feels like it could be something worse.

And when things really go south in the markets, there is no true hedge outside of cash. We learned that in 2008 when gold slumped 30 percent from $1,010 to $700 an ounce and silver shed nearly 60 percent from $21 to $9 an ounce.

Of course, history might not repeat itself (despite warnings of a recession from the ECRI). And there are quite a few investors who are still bullish in the near-term for gold and silver prices.

MF Global’s Tom Pawlicki is calling for gold to advance to $1,700 and silver to move toward $33 an ounce in the short-term (per Barron’s). Technical traders argue gold’s still in a four-week-old downtrend (per Kitco). If gold closes both $1,535, expect more selling. If it closes above $1,705, it could be time to get bullish.

For silver, bulls are looking for a close above $33.58 and bears are looking for a close below $26.15 (again per Kitco).

Today’s non-farm payroll report could determine the direction for gold and silver prices for the rest of the month. “Many think (the jobs number) could dash recession expectations or rekindle widespread macro economic uncertainty,” the CME Group said in a statement yesterday (per IBTimes).

It’s clear we seem to be at a turning point in the markets. And that’s evidenced by lower silver price predictions from leading analysts. TD Securities expects silver to average $36.11 per ounce this year and $39 an ounce in 2012 (per ResourceInvestingNews). That’s roughly in line with predictions from Credit Suisse. They expect silver to rise to $33.70 in 2012 and taper off to $30.60 an ounce in 2013. Credit Suisse also points out that another silver price sprint to $50 an ounce appears to be “increasingly unlikely.”

Natixis Commodity Markets sees silver averaging a ho-hum $27.50 an ounce in 2012 on decreased industrial demand, and gold at $1,450 an ounce.

The only thing that has me feeling like we might be near a bottom in silver prices is the fact that no one’s making bold predictions of $100 silver or $250 silver like they were this spring. That only happens when prices are in a strong uptrend, and the lack of bold predictions and media coverage could be the perfect buying opportunity as the precious metals consolidate.

“It would be quite conceivable to see silver test the strong support area at $20, but that gift would really be too much,” writes Warren Bevan at Goldseek. “Already, with this nice decline refiners are struggling or simply can’t keep up with demand.”

Indeed, the only place we’ve really seen increased demand for precious metals is in the physical coin and bar market. Those are investors who are in for the long-haul, though, and that doesn’t necessarily bode well for the short-run.

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06
Oct
2011

What is gold price suppression?

by Fred Mason

A few weeks ago, I might have argued that gold price suppression is a myth. The more I learn about it, though, the scarier I find the concept.

Gold price suppression refers to coordinated efforts to lower the price of gold. On the face of it, that sounds like a meaningless goal. Dig deeper, though, and you’ll see there’s a whole lot at stake; namely, the future of the U.S. economy.

If governments, institutions and individuals lose faith in the dollar as a reserve currency, the Greenback’s value will plummet. It will be much harder for the U.S. to borrow money, and government services will have to be slashed. With 48.5% of the U.S. living in a household that receives some form of government benefits (per the Wall Street Journal), slashing benefits could collapse the U.S. economy.

Here’s what really changed my mind about gold price suppression: a single diplomatic cable released by WikiLeaks (click here to see the gold price suppression cable from Wikileaks). In it, the U.S. Embassy in Beijing wrote to the U.S. State Department, warning that the Chinese government was proactively dumping dollars in favor of gold reserves in an attempt to undermine the dollar and raise the clout of the Chinese Yuan.

The cable highlighted an article titled “China increases its gold reserves in order to kill two birds with one stone” from a State-sponsored newspaper in China. It was apparently alarming enough for the U.S. Embassy to send it straight to the State Department. Here’s an excerpt from the story:

“The U.S. and Europe have always suppressed the rising price of gold. They intend to weaken gold’s function as an international reserve currency. They don’t want to see other countries turning to gold reserves instead of the U.S. dollar or Euro. Therefore, suppressing the price of gold is very beneficial for the U.S. in maintaining the U.S. dollar’s role as the international reserve currency.

China’s increased gold reserves will thus act as a model and lead other countries towards reserving more gold. Large gold reserves are also beneficial in promoting the internationalization of the RMB.“

Of course, right now, the yuan is tightly controlled by the Chinese government. It’s difficult for retail investors to even invest in the yuan (see our post How to buy Chinese Yuan for more), but China’s showing signs of loosening that control.

It’s not in their interest to de-couple the yuan and dollar yet, since tying it to the Greenback keeps Chinese exports cheap. It is interesting, though, that China’s could be building up enormous leverage over the U.S.

“When they [China] want the dollar to fall, they will let it,” Mark Weisbrot, the co-director of Washington’s Centre for Economic and Policy Research, told Al Jazeera recently.

In the meantime, China’s accumulating gold, even while they realize that the U.S. could be working to suppress gold prices. Should the U.S. economy continue to stagnate, suppressing gold prices looks like a losing battle.

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04
Oct
2011

Silver coin shortage reeks of price manipulation?

by Fred Mason

By now, most silver investors have heard about the lawsuit against JPMorgan Chase & Co. (NYSE:JPM). A class action suit’s been pending against the bank since 2010, when a large group of investors accused JPM of taking out enormous short positions in the silver futures market. The move was allegedly a bid to manipulate silver prices (see our post Silver price manipulation case narrows in on JPMorgan; drops HSBC for more).

Interestingly, there are rumors floating around the Web that some silver coin sellers could be doing their own form of silver price manipulation: namely, refusing to sell coins in the face of lower silver prices.

“I visited three very reputable distributors today – AMPEX, Gainesville and Northwest Territorial Mint – and all three of these dealers were mysteriously out of stock on one-ounce silver coins,” writes George Maniere at Market Oracle. “I can only conclude that they are willing to sit on them until the price of silver goes back up.”

Even the U.S. Mint got in the action, halting orders for sets of un-circulated American Silver Eagles (see our post Expect volatility on the path to higher silver prices in 2012 for more) because they can’t stock the necessary blanks to make the coins.

Everything’s in flux right now. We’re going through what the Financial Times calls “the biggest swings in precious metals since the collapse of Lehman.” According to the same article, though, gold and silver coin sales hit all-time sales records on Thursday (Oct. 22), Friday (Oct. 23) and Monday (Oct. 26).

That left the shelves at silver coin dealers empty. Demand for industrial precious metals may be falling, but it’s actually rising in the physical markets on bargain-hunting. That means a whole lot of investors see the recent drop in gold and silver prices for what it is: a rough patch in a decade-long bull market for precious metals.

“Buying in the retail market … it’s just huge right now,” Jim Puplava, the host of Financial Sense Newshour, said on Saturday. “They drive the price down, and it’s like Nordstrom is having a 20-30 percent off sale.”

While it may seem strange that coin dealers run out silver as soon as prices dip, it’s probably not manipulation and refusal to sell silver coins, but rather that a tidal wave of buyers have moved in to capitalize on lower prices. Even the popular Sprott Physical Silver Trust ETV (NYSE:PSLV) announced a week ago that it’d run out of silver and needed to replenish its supply.

“I think investors are really smart,” Kathy Derbes of KDerbes Precious Metals LLC told Mr. Puplava. “They know what’s going on. They understand that these price breaks – particularly this time around – are not telling us anything about the fundamentals of gold and silver. In fact, I think the reasons for owning it have gotten a lot stronger.”

Derbes adds that current orders for her clients have a two to three week delay before they’re shipped, and she doesn’t expect that to change. If anything, the delay could increase.

“We’re probably in the beginning stages of what could be shortages,” she said. “We have to remember that it’s a market that can’t be printed into existence like all the paper currencies. We have to wait for the mints to catch up.”

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03
Oct
2011

Silver price analysis leaves investors paralyzed

by Fred Mason

The only thing that’s certain in the silver market now is uncertainty. Even after a 40 percent plunge two weeks ago, silver prices have struggled to recover, and the upcoming week doesn’t exactly have investors feeling bullish.

Many analysts are actually calling for further weakness in silver prices on decreased industrial demand. CommodityOnline warns prices could fall as low as $23 an ounce in the near-term.

It’s difficult to downplay the severity and threat Greece’s financial crisis poses for the rest of the world. Consider this: Greece’s debt now stands at 150 percent of the country’s GDP. Investors are so negative on the government’s ability to pay back that debt that the interest rate on three-year bonds there recently climbed above 100 percent (per CommodityOnline).

If the problem were isolated to Greece alone, it might not be such a big deal, but many of the holders of Greek debt are intimately tied to economies in bordering countries. BNP Paribus, Societie General and Commerzbank hold some $14.5 billion in Greek debt. The IMF, EU Loans and European Central Bank hold an additional $150 billion in Greek debt (again per CommodityOnline).

Rest assured that should the Greek government default on that debt, reverberations will take down other countries or financial institutions. That’s left investors fleeing the Euro not for gold or silver (as we’d like to see), but rather for the dollar.

Couple the strengthening Greenback with fears of a global slowdown, and the silver bears are starting to make a very compelling argument indeed. If we are on the cusp of another recession, silver and copper will be the metals that are hit the hardest (owing to significant price influence from the industrial sector).

We only have to look back to 2008 to find evidence that when investors start raising cash, precious metals don’t automatically shoot higher. Between March 2008 and the end of the year, the silver price fell nearly 50 percent from $21 an ounce to $10.50 an ounce. During roughly the same period, the S&P 500 lost more than 10 percent in one of the most brutal sell-offs in decades.

Still, you hear precious metals referred to as a safe haven investment. That’s true to some extent, but when there’s blood in the streets, don’t count on metals to rise. They’re going to fall alongside of every other major asset class. Metals only become a safe haven when inflation is rising. And you can’t get inflation if everyone’s raising cash because they’re nervous about what’s going on in Europe (and China).

“If the economy continues to weaken silver could fall as far as $21.00 an ounce,” writes George Maniere at MarketOracle.

Bearish predictions like this have me re-thinking my decision last week to go long the ProShares Ultra Silver ETF (NYSE:AGQ). AGQ is a leveraged bet that the price of silver will go up. I’m starting to consider betting against the S&P instead by buying shares in ProShares UltraPro Short S&P 500 ETF (NYSE:SPXU).

I don’t say all this because I’m bearish on silver prices in the long run. I’m absolutely not. Instead, I’m afraid we could be in for a genuine market rout that’s akin to 2008′s Great Recession. I lost more money than I care to admit then by sticking to the “buy-and-hold” mantra. I don’t plan to repeat the mistake, and the recent surge in the value of the dollar is evidence that other investors feel the same.

I’ll leave you with just this warning: don’t blindly buy silver on recent weakness. Sit in cash and wait until precious metals decide which way they’re heading. Silver will have it’s day in the sun again, just don’t expect it until we know for sure we’re not on the brink of the dreaded double-dip.

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How to invest in water stocks

Often overlooked as a commodity, water supplies could become increasingly critical as emerging economies around the world improve their diets and demand more agricultural resources for the production of meat... Read on.

World’s largest economies in 2050 will look very different

India’s rapid ascent to economic supremacy will be driven by a surging working age population, which will grow more than 40 percent between now and 2050... Read on.

How to invest in cotton stocks

If you’d like exposure to cotton markets without delving into futures and options contracts, a handful of cotton ETNs and cotton-related stocks are available... Read on.

How to buy Chinese Yuan

The Chinese yuan or renminbi has risen about 5 percent a year over the past five years, and some investors argue that China’s currency is still undervalued by 40 percent. If the dollar suffers ... Read on.

Five cheap franchises to start with less than $10,000

Franchises are so ubiquitous we often don’t realize we’re shopping at one. From McDonald’s to Hampton Inns and doggie day cares to campgrounds, they’re literally everywhere. All told, franchises account for 10.5 percent of all businesses in the U.S, and they... Read on.

Why invest in silver?

Ask 10 people why you should invest in gold and silver, and you’ll probably get 10 different answers – many of which will be accompanied by a shrug. Most investors don’t understand the motivation for holding gold or silver bullion. Nonetheless, it’s been difficult to ignore... Read on.

How to Invest in Copper

Copper isn’t as glitzy or glamorous as gold or silver, but in many ways it feels safer. Since copper is regularly used in electronics, it’s consumption per person (particularly in the developed world) has been on the rise for decades. So how does one invest in copper? Read on.