Outlook For Silver In 2013

David Morgan presented his outlook for the silver price in 2013, starting off with two long term silver price charts, both adjusted for inflation. The first of the two charts is using the CPI as measured by the US government. The chart shows the peak price of silver in 1980 (adjusted for today’s inflation) which is $ 125.  The upside potential for silver is clear.

Still, these prices are rather irrelevant, as the price of precious metals reflects the value of currencies. In the extreme scenario where an infinite amount of money would be printed, the price of the metals could go to infinity (obviously a theoretical example). It makes more sense to look at the long term trend, which is clearly up. David Morgan used several charts in that respect:

• The long term silver price is rising and keeps on accelerating in its move up.
• The gold to silver ratio is in a long term downtrend (which is in favor of silver). Silver has been outperforming gold over the past decade.
• Expectations remain that silver will continue to outperform gold. The current gold to silver ratio of 50 to 1 is expected to turn to 16 to 1, which is the historic average of the monetary ratio. Here it gets interesting. It makes sense to look at the ratio from the perspective of metals in the ground. By doing so, the ratio becomes 7 to 1. David Morgan doesn’t rule out that a ratio close to that will be possible at the peak.
• Silver is appreciating in ALL currencies, no matter if there are temporarily large increases or decreases in given currencies.

Now it’s often mentioned that silver touched $ 50 in 2011, speculating that it has passed its peak in the current bull market. The matter of the fact is that it was a one day event and it happened only in the futures market. In the physical market for instance, there was a “bid back” situation, which means the buy / sell spread was very large (dealers were buying physical silver at $ 35 an ounce and selling at $ 50). Moreover, the fact that it took only one day doesn’t make the market.


When looking at the same chart taking the SGS inflation into account, we see a totally different picture. That’s a measurement that is used by Shadowstats.com and is using the CPI with the same calculatation methodology as in 1980 (which was obviously than today’s calculation). By doing so, the picture becomes more extreme. David Morgan explains that a move from today’s $ 33 to $ 100 would indeed be a threefold move up, but still significantly low compared to the historic peak.

 

The long term trend of the silver price in all major currencies was shown in the following graph. Mark O’Byrne shows two concrete examples that prove the idea that silver is a store of wealth:

• In 2008, while the financial crisis was raging, the Sterling was under bigger pressure than the other currencies. You see on the graph that silver lost value in all currencies, except in Sterling.
• Likewise in 2011, the Indian Rupee came under high pressure. While the silver price had declined against all currencies, it did not in terms of Indian Rupees.

Yesterday In Gold And Silver

The gold price didn't do much of anything during Far East and most of the London trading day on Thursday, as it sort of wandered around aimlessly within a ten dollar trading range below Wednesday's New York close.

Gold finished the Thursday session at $1,700.00 spot right on the button...up $5.70 from Wednesday.  Net volume was pretty decent...around 140,000 contracts.

However, a rally of some substance began to materialize about 8:40 a.m. Eastern time...about twenty minutes after the Comex open.  The fun ended at the London close at 4:00 p.m. GMT...11:00 a.m. Eastern time.  From there it more or less traded sideways into the close of electronic trading.

Gold's low and high ticks, which are obvious on the chart below, were $1,684.90 and $1,704.40 spot.

The subsequent rally lasted until the same 11:00 a.m. Eastern time...$33.38 spot...and that proved to be silver's high tick of the day.  Then it got sold off until noon, before trading sideways into the close.

The silver price traded down about a percent by mid-afternoon in Hong Kong...before rallying back to almost unchanged by 11:00 a.m. in London.  From there it got sold off once again, with the low price tick [$32.46 spot] coming at the same as time as the low tick in gold...8:40 a.m. in New York.

Silver closed at $33.03 spot...up a whole 12 cents.  Volume was pretty decent...around 41,500 contracts.

The dollar index closed on Wednesday at 79.82...and then traded a hair lower up until 8:00 a.m. in New York.  The subsequent rally took the index back up to around the 80.30 mark...and it hung around that number for the rest of the Thursday session...closing at 80.25.

There was little co-relation between the precious metal prices and the dollar index at all yesterday...especially considering the fact that gold and silver rallied together with the dollar index during the New York morning session.  I'm sure that had something to do with bad new on the euro front.

The silver stocks were mixed...and Nick Laird's Silver Sentiment Index closed down a smallish 0.34%.

The gold stocks opened flat, but soon rallied to their 11:00 a.m. high...in lock-step with a rising gold price.  Once that high tick was in, the stocks got sold down to just above the unchanged mark...and proceeded to trade sideways from there until the equity markets closed at 4:00 p.m. Eastern time.  The HUI finished up 0.40%.

There were no reported changes in GLD yesterday...but a rather chunky 1,258,182 troy ounces of silver were deposited in SLV by an authorized participant.

The U.S. Mint had its third sales report in a row yesterday.  They sold 4,500 ounces of gold eagles...1,000 one-ounce 24K gold buffaloes...and 25,000 silver eagles.

Over at the Comex-approved depositories on Tuesday, they reported receiving 614,504 ounces of silver...and shipped 452,643 ounces of the stuff out the door.  The link to that activity is here.

Here are a couple of very interesting charts that Nick Laird sent my way yesterday evening...and they're definitely worth sharing.  Neither needs any further embellishment from me.  All comments regarding these charts should be directed at Nick...not me.

I have a decent number of stories for you today...and I hope you can find the time to read the ones that interest you the most.

Gold Miners Facing Tough Challenges

A new report from the world's largest gold producer Barrick Gold provides yet another illustration of the problems facing gold mining companies.


While 1991 saw the discovery of 11 new gold mines, in 2011 only three mines with production potential were found. Aside from the drop in gold ore and rising production costs, a third factor is increasingly hindering gold production: producing countries' tedious licensing processes and sluggish bureaucracy. 


According to Barrick Gold, this is being exacerbated by increasing environmental regulations that could jeopardise many mining operations.


In South Africa, extraction of gold from depths of more than 6,000 metres has almost become the rule rather than the exception. Mining costs are being pushed up by the logistical challenges of drilling at great depths, as well as an increasingly militant work force which is demanding higher wages. 


Add exploration costs to this mix and it’s little wonder that companies’ profits are being squeezed, despite the high gold price. According to Barrick, total production costs for all mining companies exceeded the $8 billion mark last year.

Many companies are also facing increasing hostility from residents in mining areas. This has been particularly evident in Peru, Bolivia or Ecuador – where there have been violent clashes between local people and police.

A tricky set of factors for many companies. But given the gains in gold many expect in the coming years, great fortunes could still be made in the right gold mining investments.

5 Things You Should Know Before You Flip A Property

1. Get An Inspection On The Home:

Get a complete inspection done on your property. By, spending a few hundred dollars on this expense you can save thousands in problems that you cannot see. Foundation, Pest, Wood Rot, Etc… By, getting a full inspection you can rest assured that you know every thing that is wrong with the property before its to late. 

In the contact for the house you need to make sure that you have 7 days to have a inspection preformed, and if the inspection finds problems that are going to cost more money that you are willing to spend you can get out of the contract with no penalties.

2. Money Is Made At The Buy, Not The When flipping a house your money is made at the purchase not at the sell of the house. So, many times people buy a house with the intensions of making a huge profit only to find out that they could not make any money after all the renovations because the purchased price of the house was to high. 

When you purchase your property you need to be sure that you buy the house with enough money to make renovations, have carrying cost, and add about 5 $6,000. Now, cost is at $147,000, and that is if everything goes as planned. Profit is under 10,000 dollars. The mistake was made at the purchase at the home, not the sell.


3. Don’t Do The Work Yourself:

Get a contractor or several sub-contractors and have the work done quickly. You need to have you house flipped ASAP, so that you can get it on the market and get it sold. When I started flipping my brother and me did a house together, and we did all the construction. I had a construction background and figured it would save thousands, but it took us over 4 months to get the work done that a contractor could have had the work done in a month. 
But, we trying to save money on our flip did all the work on our time off and after work, and it just took to long. 

On our 2′nd flip we used contractors for almost everything and had the house completely flipped with a new roof, new air conditioning, new hardwood, and much more in only 3 weeks. We did not have to spend all our time working on the property and were able to spend that time looking for the next deal. This is how you get rich in real estate.


4. Use A Real Estate Agent:

Do not try to sell you house on your own. Harness the power of a real estate agent and the power of the MLS system. When you do a FSBO you are depending on people driving by your house and seeing you sign, with a real estate agent you have some one actively marketing you house to get it sold. Once again this will free up more time for you to look for more great deals. If you want to help the process I have found that Craigslist and listing you house in Google Adwords help to, but I use these tools with the help of a agent to make sure I have all my bases covered.


5. Place The Property For Sale 1 To 2 Percent Below Market Value:

If you are wanting to flip real estate and make money the object is to buy and sell the property as quickly as possible, so that you can move on to the next house. If you purchase a house and try to sell it at top dollar to make and extra couple of thousand dollars on your flip, and end up holding it for 6 months you are loosing money. Get the house on the market at a price that is going to blow the competition away, and you will sell it no matter what the market conditions.

On our second house the market for selling house went down do to the housing market as a whole, and the tightening of the loans across America. We were told that you could not sell a property in this market, but we went ahead anyway and flipped our house. After 3 weeks on the market we had 3 people wanting to buy the house. Why, because we offered it at such a great deal that people wanted to jump on it. That is what you have to do especially if the market is slow.


I hope this article has been helpful with the basics needs of flipping a house. If you will study and learn you will make money. But, do your homework before you purchase a house, and make sure that you can pull a profit on your deal. Then, make it happen!

Vancouver Real-Estate Market Unlikely Victim Of China Slowdown

Over the past 18 months, the global fascination with Chinese economic invincibility has steadily waned. And economic sophisticates have reached a consensus: China’s growth rate is slowing. Western demand for exports is falling. And the economy is plagued by overinvestment and excess capacity in housing, steel, and a host of other sectors. Officially, China is growing at a 7.5 percent rate this year. But I guesstimate that China is downshifting. Over the next 10 years, it’s possible that China will grow at an annual rate between 3 and 5 percent.

The financial press is doing a good job discussing these direct impacts of China’s growth slowdown. But there are plenty of other indirect, second-order impacts that have been ignored.

For instance, the impact of the Chinese economic slowdown on art markets, something I’ve wrote about in this space, has been dramatic—with the share price of Sotheby’s falling by almost 50 percent over the past 18 months.

The hidden story embedded in the Chinese economic “slowdown” is that investment-led growth is plunging. And the global implications are many: industrial commodities like coal and iron ore lose their China “bid”; mining companies find themselves expanding capacity in the face of slowing demand; commodity-reliant countries like Brazil find the China growth tailwind is turning into a headwind; currencies like the Australian dollar are exposed as extremely vulnerable; rail and port operators find that the volume of containers they handle is falling.

“Vancouver has been a popular destination for Chinese, driven in large part by its proximity to China and its spectacular feng shui,” notes Jamie MacDougal of Sotheby’s International Realty. The surge of Chinese interest began in earnest following the Tiananmen Square massacre. Vancouver emerged as a safe place to park capital. A long-standing Canadian policy has offered citizenship to foreigners willing to make substantial investments. But MacDougal notes that Chinese offshore buyers arriving in Vancouver spiked to truly unsustainable levels in 2011, during which bidding wars were regular events and property values rose by the week. Check out the chart below.

Given this dynamic of rapidly rising supply, it would not be surprising to most observers if prices were falling rapidly. This has not been the case. According to Eugen Klein, president of the Real Estate Board of Greater Vancouver, “prices in the region remain relatively stable overall.” Again, the raw numbers seem to validate his view: average home prices in the Vancouver area were down a mere 0.8 percent between September 2011 and September 2012. It sure seems like we are witnessing stable prices in the face of rising supply and falling demand.

What You Need To Know Before Investing In Silver

I believe there is more opportunity in the silver market over the next two years relative to gold and, as such I’m now advocating accumulating a large overweight position in silver relative to gold because, over the long-term, there is such a great demand vs. supply situation developing….Before investing in silver, however, there are a number very important things that you must understand about the silver market. Let me explain.

1. Avoid Leveraged Silver ETFs:

Another important thing you need to understand about the silver market is you won’t know what’s about to happen ahead of time when the large players really move the market, and you will have to just endure it if it goes against you. Therefore, it is essential that you don’t use leveraged ETFs because the volatility will intensify. It is difficult enough to endure the volatility without using a leveraged non-physical backed derivative to trade it.

2. Recognize The High Degree Of Volatility:

The silver market…will trade with about 300% more volatility than gold does. This means if gold is up or down 1%, silver will probably be up or down 3%. The total silver market is a fraction of the size of the gold market in dollar amounts, so the market is less liquid. Relatively small amounts of money in or out of the market will produce sharp price swings. Because there are only a few large institutions, such as JPMorgan and HSBC that dominate the market making of silver and are also the custodians of the large inventories, it is an easily manipulated market.

3. Don’t Trade Silver Futures:

Also, do not trade silver futures, because of the high leverage and the way the exchange can change your margin requirements overnight. They can crush you and force you to liquidate at the worst time. Do not do anything that might force you to sell except when you intend to. Many speculators found this out the hard way in 2011, when the price of silver approached $50 and the exchange tripled margin requirements. This is supposed to protect the exchange and it does, but the real reason was to try to crush the longs and staunch the losses of exchange members, who had shorted and were literally losing hundreds of millions of dollars.

There is also a clause in every futures contract that it can be settled in cash, and not actual physical delivery so if silver soared so much it was bankrupting exchange members, they could declare that the market is in “liquidation only” mode like in 1980. This would short-change the investors on the right side of the trade. Of course conveniently, this is never done when average investors are on the wrong side of the trade, but only when members of the exchange and large institutions are hemorrhaging cash.

4. Physically Possess Your Silver Holdings:

By far, I feel the safest place to store your metals holdings is to physically possess them, and I strongly advocate that….I feel Canada is the best place to have your metals stored when you use exchange traded funds or trusts. It is a country with a long history of mining and natural resources, and most of the companies involved in the sector are located there, so it is probably the safest country from government confiscation. They have different and easy to invest vehicles for their own and foreign citizens to own gold and silver, like the Central Gold Trust (GTU) and the Central Fund of Canada Limited (CEF). These are long-term vehicles with extra precautions, like storage at mints, and they are even insured.

5. Average Into Your Silver Purchases:

Another thing you want to do when accumulating your silver position, especially if it is correcting, is be patient and average into your purchases very, very slowly.

The Fundamental Flaw In The Silver Market:

The paper silver market (all outstanding futures and derivatives) is many times larger than the actual physical silver market which means that if a significant percentage of paper silver investors demanded actual delivery, the price would rocket higher when the shorts in the market couldn’t fulfill their obligations. That is a fundamental flaw in the structure of the silver market.

As time goes by and demand increases along with very tight supplies, [this shortage in actual physical silver] will force silver prices to increase much more than the gold market. That is also why you need to be concerned if you actually physically possess your silver. [You must] make sure you are using the best ETF possible to profit from the huge increase in higher prices. When you own a silver trust, you know it is physically backed and can deliver the silver so if there is a breakdown in the silver market structure, the premium for this trust would skyrocket.

How To Get Started Investing In Silver

Many leap into the silver's market without realizing how volatile the market can be. Most investments to the uninformed can involve some major risks. Taking your chances is never ever a waste of time provided that you know how the program works, and you use the spot chart to your benefit. Making a good guess on when prices will rise or fall is the main key to success in this trade.

Taking appropriate actions to any event in the silver market will save you from unnecessary loses.
Many industries suffered a loss during the economic recession in 2009. Silver miners reported a drop in production, whereas demand from photography and kitchen ware industries fell by a certain percentage. This year, however, the silver spot chart 2012 shows that the silver market is starting to gain momentum once more. Demand for silver is now on the rise, with digital gadgets, laboratory equipment, and medical instruments depending on silver for raw material.

It is speculated that the silver market will remain stable for the entire year, yet this does not make silver any less volatile. Silver prices may still go up or down anytime at a range not higher than $13. Experts have different interpretations of how the silver market will fare in the years to come. Only one thing is certain, that the demand for silver will continue to increase. At the same time, the mining industry does not foresee shortage in supply of silver in the near future.

What determines prices as with anything is supply and demand. When there is a decrease in the supply of silver, tendency is for customers to demand for more, resulting in an increase in price. Alternatively, when the supply of silver exceeds the demand for it, the price will go down. In this circumstance, the best time to acquire silver is when the cost is low, and the best time to sell is when the cost is higher. But it is not as simple as it appears.

What makes silver a risky venture is that, you cannot tell exactly when the silver prices will go up or down. The use of a silver spot chart is indispensable for predicting what will happen next in the silver market. It shows silver prices and the real modifications in realtime. It lets you see how the figures go up and down over a predefined period. By examining the behavior of silver prices and their causes, you have a better chance of realizing the appropriate option between buying and selling silver at any circumstance. A silver spot chart is crucial for knowledgeable and low risk investment in the silver market.

Gloomy Reports Show Europe's Economies Worsening

The fourth quarter has so far brought no improvement in the fortunes of most of Europe's economies, which now risk shrinking more than previously expected, gloomy data showed on Tuesday.

Purchasing managers indexes (PMIs), which gauge the activity of thousands of companies worldwide, showed euro zone businesses endured their worst month in October since June 2009, with little hope of a turnaround coming soon.

The euro zone relies heavily on Germany, its largest economy, to generate growth.

If the PMIs fail to improve for November and December, the euro zone economy could easily face a hefty contraction in the fourth quarter rather than the stagnation projected by economists polled by Reuters two weeks ago.

"Given the stabilization in financial markets, and in consumer sentiment indicators in some countries, we thought perhaps you would see some stabilization in the PMIs as well," said Janet Henry, chief European economist at HSBC.

"What's disappointing about the Q4 data is the weakness reflected in the core euro zone indicators -- the French and German PMIs."
German industrial orders data for September only added to the sense of gloom with a 3.3 percent month-on-month decline, far worse than the 0.5 percent consensus fall in a Reuters poll of 38 economists.

Markit's Eurozone Composite PMI fell in October to 45.7 from 46.1 in September, down slightly from a preliminary reading of 45.8 two weeks ago and marking its ninth consecutive month below the 50 mark dividing growth from contraction.
The survey will do little to alter the view of a majority of economists that the European Central Bank will trim interest rates to a new record low of 0.5 percent, although probably early next year rather than this Thursday.

"Sentiment is still being hit hard as companies worry about the dual impact of weak domestic demand and a slowing global economy," said Rob Dobson, senior economist at PMI compiler Markit.

British industrial output also fell more sharply than expected in September, data showed on Tuesday, reinforcing fears an incipient recovery will struggle to gather pace.
Britain's services PMIs were released on Monday, and suggested the same.

But there were two bright spots in Tuesday's PMI data. The Irish survey rebounded strongly in October and the Italian services PMI, while still showing businesses are struggling, shot above the highest forecast from economists.

"It's not all really bad news, but it's all consistent with a contraction in the real economy. And that's not what you want when you've got really high debt levels," said HSBC's Henry.

That applies particularly to Spain, the euro zone's No.4 economy, as its services sector shrank for a 16th straight month. Most say it's only a matter of time, likely before the end of the year, that Spain asks for a full sovereign bailout.

The European Commission has set dire economic forecasts for Spain until 2014, a newspaper reported on Tuesday, shooting down the targets set out by Madrid and potentially pushing it closer to seeking euro zone aid.

Jewellery Buy Isn’t Equal To Investing In Gold Asset Class

It is good you want to start planning for your future. But it should not be limited only to create a fund for buying a house; you should also start creating a corpus for your other financial needs, such as buying a car, planning for a holiday and the most important of all your retirement. To achieve the same, you need to start now as it gives you a heads up.

As you have currently projected a need which is 10 years away, your investments can be long term. You should start investing via systematic investment plans (SIPs) in equity funds. It seems you are a first time investor and if you are not comfortable taking risk or are risk averse, you can look at hybrid funds or monthly income plans (MIPs). Hybrid or balanced funds invest 65% in equities and the balance in debt instruments. Funds with a consistent track record are HDFC Balanced fund and Tata Balanced fund. MIPs invest even less in equities (15-25%). Reliance MIP and Canara Robeco MIP are good options.

You are right when you say that equity MFs have not seen any gains in the last two years. On an average, equity funds have delivered low or negative returns during the said period. But that is the true nature of equity; any equity investment needs to be done with a long-term view. What you need to do is periodically review it and ensure the fund you are invested in is not under-performing and is in accordance with its peer group. In case of continuous underperformance, consider changing the fund.

You should continue your PPF. Buying jewellery is not an investment and a better way to invest in gold is through exchange-traded funds and gold funds. But you should not have more than 10% of your investments in gold; the balance can be spread between MFs and PPF. 

You should try to optimize your portfolio rather than maximizing your returns. The endeavour should be to achieve a healthy risk-adjusted return. 

Gold Purchases: Time Them With Technical Analysis

Technical Analysis is mathematical analysis of the market based on price action, but not the fundamentals of supply, demand, costs of production, and hundreds of other important factors (fundamental analysis). Many people will tell you Technical Analysis does not work. I disagree. If you understand its limits, it works quite well.

My View of Technical Analysis

• Keep it simple. More variables and more analysis are not necessarily better. I need it simple, or I get lost in the complexity.

• Filter out the “chart noise.” All markets jump up and down on a 5 minute, 15 minute, daily, and weekly basis. Most of the movement probably means nothing. Look at the big picture.

• Technical analysis provides the timing on when to buy or sell. It is not (in my experience) very good at picking what to buy or sell. Look at the big picture fundamentals for what, and use technical analysis for when to buy or sell.

• If you want to buy, based on daily data, make certain the weekly data is supportive; and, if not, keep a close stop. It is easy to buy on a short–term up move just before the long-term downtrend resumes.

• There is not one right answer, one analysis technique, or one indicator that is always correct or best for everyone. Find what works for you.

• If you don’t like it, don’t use it, and find another method. Your attitude and your discipline at sticking to a proven investing and trading plan are more important than what analysis process you actually use.

• Don’t trust your emotions. Trust your charts.

• Don’t give up! Surprises happen. Corrections always happen. Trust the big picture.

• Trust buy signals in bull markets and sell signals in bear markets. Be skeptical of buy signals in bear markets and sell signals in bull markets. (Easy to say, difficult to do.)

• There are many highly competent technical analysts. Read their analysis to self-educate.

Gold Analysis

• Thanks to massive government budget deficits and excessive money supply increases, gold has been in a bull market since 2001 that will last several more years. Trust it. Gold is what to buy.

• Pick your buy points based on technical analysis. Look at the following chart for weekly gold prices, and look at the turning points for my favorite oscillator. An oscillator moves from low (over-sold market) to high (over-bought market) in parallel with prices. Buy low and sell high! The chart and oscillator tell you when to buy.

Seven years of gold prices are shown in the above chart – note that the vertical scale is logarithmic. You can see that the oscillator turned up from low levels (very over-sold) in 2005, 2006, 2007, 2008, December 2011, and June 2012. These points are marked with a circle and an *, and they were excellent buy points. Note that five other minor turns in the oscillator are marked with an “M,” and these were buy points of lesser strength. Now look at the price of gold at each of those turning points.

Clearly, the price of gold was temporarily bottoming at each of those turning points. Every time, except at the minor turn in 2008, gold went much higher in the next several months. Based on the above timing data from this oscillator, do you think technical analysis can be beneficial?

Why Silver Prices In 2013 Will Continue To Perform

If asked to name the top performing commodity of the past decade, not many would answer silver because of its notorious volatility.
Yet, according to Lloyds TSB, silver prices have delivered the best gains since 2002.

Lloyds said silver beat gold because "[I]n addition to being perceived as a safe haven investment, high demand for industrial uses has also contributed to the strong rise in the price of silver."
The key question for precious metals investors is whether silver will continue to be a good performer in 2013. Lloyds data shows that the shiny metal soared 572% over the past decade, beating gold's rise of 428%, which was second best among commodities.

Here Are Five Key Factors That Show Why Krauth's Forecast For Silver Prices In 2013 Could Be Right On The Money.

Investment Demand For Silver:

Another factor favoring silver prices is the continued investment demand for the precious metal from the average person around the world, due in large part to central bank policies.
Through Sept. 15, exchange-traded funds' holdings of silver totaled more than 608 million ounces and were valued at $20.5 billion.

"Investors and analysts are bullish on expectations that additional central banks will do more to attempt to stimulate economies in order to increase consumption and spur employment, leading to even greater investor attention on the 4,000 year allure of silver as a safe haven and a store of value," said Michael DiRienzo, executive director of the Silver Institute. Let's not forget about the declining inventories of silver either. According to Comex, its stockpiles of the metal hit a four-month low in early August. That shows accumulation of silver by investors.

Silver Prices In 2013: New Industrial Uses:

One positive for silver has to be the aforementioned industrial uses.
At last month's Denver Gold Forum, the CEO of silver producer Hecla Mining (NYSE: HL) Phil Baker made an interesting observation. He said there was a parallel to what happened to silver usage at the turn of the 20th century to what is happening today. At that time, photography became a major driver of demand of the silver market. Silver's expanding usage in a large number of industries may help to offset the general weakness in the global economy.

This time though Baker believes it will not be one industry solely driving demand, but a myriad of new users of silver looking to take advantage of the metal's unique properties (such as electrical conductivity) in the electronics and medical fields among others.

Resource Nationalism:

From the mining standpoint, there's a looming risk that could drive silver prices higher in 2013.
That's the growing threat of resource nationalism, the number one global strategic risk for mining companies, according to Ernst & Young. The risk advisory firm Maplecroft said in its Political Risk Atlas for 2012 that "where [resource nationalism] does take place, businesses (mining companies) could lose control or possession of assets. . .or face higher taxes."Such scenarios would put a crimp into production of resources like silver, and drive prices higher.

Secrets For Timing The Real Estate Market

For starters, you can employ the same techniques that have worked for many who live by the creed: Buy low and sell high. The first step is to determine the type of real estate market that exists in your town.

Types Of Real Estate Markets

Although there are many variations and twists, basically real estate markets fall into three categories:

Seller's Markets:

Conversely, in seller's markets, there are more buyers than available inventory. Because there are fewer homes for buyers to choose among, almost every home will sell. Typically, there is much less than six months of inventory in a seller's market. In extreme seller's markets, there is less than two months of inventory in reserve.

Buyer's Markets:

Buyer's markets exist when there is more inventory, meaning houses for sale, than buyers. Because buyers have many homes to choose from, not every home for sale will sell. Most experts agree that if six months or more of inventory is on the market, it is a buyer's market. Also note that in buyer's markets, fewer numbers of buyers will result in fewer sales, which can skew median prices.

Neutral Markets:

Neutral markets are balanced. Typically, interest rates are affordable and the number of buyers and sellers in the marketplace are equalized. The scales don't tip in either direction, meaning the market is normal without experiencing volatile swings. Inventory is generally around four months, give or take.

Buying In A Seller's Market:

If a buyer has no urgency to buy a home, it's not a good idea to buy in a seller's market. Here are a few disadvantages to buying a home in a seller's market:

• Top Price:

         Multiple offers are common. Sellers command list price and get it.

• No Concessions:
• Sellers are reluctant to pay any of the buyer's closing costs or pay for inspections.

• Contingent Offers Rarely Happen:

         Seller don't want to wait for a buyer's home to sell.

• Request For Repairs Are Not Honored:

         Sellers will typically tell buyers to purchase the home "as is."

• Sellers Control The transaction:

         Most sellers will not bend from the original contract, regardless of circumstances, because    

         there are three more buyers around the corner.

Buying In A Buyer's Market:

If you are going to buy a home and can afford to wait for primo conditions, a buyer's market is it; there is no better timing. Here are a few advantages to buying in a buyer's market:

• Lower Sales Price:

         Sellers are more willing to wheel and deal because they know if they refuse to accept your 

         purchase offer, they might not receive another. When fewer homes are selling, prices 

         typically fall.

• Buyers Can Command Concessions:

         Buyers can ask sellers to pay their closing costs, providing their lender will allow the credit.       

         Buyers can also expect sellers will pay for special reports such as pest inspections or roof 

         certifications and a home warranty.

• Contingent Offers Are More Acceptable:

          Sellers are generally more agreeable to accepting a contingent offer that is dependent on the 

          buyer selling the buyer's existing home. An offer in the hand is better than no offer at all.

• Request For Repairs Easily Negotiated:

          If the home is in need of repairs or updating its systems, sellers will often credit the buyer    

          for the repairs or fix the problem(s) noted by a home inspector.

• Buyers Control The Transaction:

          Buyers can ask for longer inspection periods, extend closing deadlines and ask for early 

          possession -- terms that would be automatically rejected in a seller's market.

Selling In A Seller's Market

This is the best time to be a home seller. Here are a few advantages to selling in a seller's market:

• Higher Sales Price:

         The list-to-sales-price ratios are lower in seller's markets, meaning sellers command higher 

          prices, sometimes over list.

• Concession Refusals:

          Sellers refuse to pay buyer's closing costs, and they often reject offers asking for seller-paid   

           inspections.

• Contingent Offers Are Rare:

          Buyers find it easier to sell their homes and realize sellers will not agree to a contingent offer 

          with 10 buyers in the wings.

• Buyers Rarely Request Repairs:

           Buyers still obtain home inspections but forego a request for repairs, accepting the property   

           "as is."

• Sellers control the transaction:

            It's common for sellers to negotiate shorter inspection periods and to demand buyers waive 

            certain contingencies such as appraisal or loan contingencies.

Selling In A Buyer's Market

If a seller does not need to sell, there is no logical reason to put a home on the market in a buyer's market. Here are disadvantages to selling in a buyer's market:

• Lowball Offers:

         Sellers in soft markets lose equity. Little demand for homes puts pressure on sales prices, 

         causing buyers to make lowball offers.

• Buyers Expect Concessions:

         Buyers will ask sellers to pay for closing costs, thereby lowering the seller's net proceeds.

• Contingent Offers Are Riskier:

         If a buyer's home does not sell, neither will the seller's, and by that time, the number of 

         buyers typically dwindle even more.

• Buyers Demand Repairs:

         All those little things sellers have put off repairing will pop up in the home inspection, and 

         buyers expect sellers to fix them.

• Sellers Do Not Control The Transaction:

          Buyers tend to ask for "out" clauses that would let them walk away from the deal all the 

          way to closing.

What You Need To Know Before Investing In Silver

I believe there is more opportunity in the silver market over the next two years relative to gold and, as such I’m now advocating accumulating a large overweight position in silver relative to gold because, over the long-term, there is such a great demand vs. supply situation developing….Before investing in silver, however, there are a number very important things that you must understand about the silver market. Let me explain.

1. Recognize The High Degree Of Volatility:

The silver market…will trade with about 300% more volatility than gold does. This means if gold is up or down 1%, silver will probably be up or down 3%. The total silver market is a fraction of the size of the gold market in dollar amounts, so the market is less liquid. Relatively small amounts of money in or out of the market will produce sharp price swings. Because there are only a few large institutions, such as JPMorgan and HSBC that dominate the market making of silver and are also the custodians of the large inventories, it is an easily manipulated market.

2. Don’t Trade Silver Futures:

Also, do not trade silver futures, because of the high leverage and the way the exchange can change your margin requirements overnight. They can crush you and force you to liquidate at the worst time. Do not do anything that might force you to sell except when you intend to. Many speculators found this out the hard way in 2011, when the price of silver approached $50 and the exchange tripled margin requirements. This is supposed to protect the exchange and it does, but the real reason was to try to crush the longs and staunch the losses of exchange members, who had shorted and were literally losing hundreds of millions of dollars.

3. Avoid Leveraged Silver ETFs:

Another important thing you need to understand about the silver market is you won’t know what’s about to happen ahead of time when the large players really move the market, and you will have to just endure it if it goes against you. Therefore, it is essential that you don’t use leveraged ETFs because the volatility will intensify. It is difficult enough to endure the volatility without using a leveraged non-physical backed derivative to trade it.

4. Physically Possess Your Silver Holdings:

By far, I feel the safest place to store your metals holdings is to physically possess them, and I strongly advocate that….I feel Canada is the best place to have your metals stored when you use exchange traded funds or trusts. It is a country with a long history of mining and natural resources, and most of the companies involved in the sector are located there, so it is probably the safest country from government confiscation. They have different and easy to invest vehicles for their own and foreign citizens to own gold and silver, like the Central Gold Trust (GTU) and the Central Fund of Canada Limited (CEF). These are long-term vehicles with extra precautions, like storage at mints, and they are even insured….

5. Average Into Your Silver Purchases:

Another thing you want to do when accumulating your silver position, especially if it is correcting, is be patient and average into your purchases very, very slowly….

The Fundamental Flaw In The Silver Market

The paper silver market (all outstanding futures and derivatives) is many times larger than the actual physical silver market which means that if a significant percentage of paper silver investors demanded actual delivery, the price would rocket higher when the shorts in the market couldn’t fulfill their obligations. That is a fundamental flaw in the structure of the silver market.

As time goes by and demand increases along with very tight supplies, [this shortage in actual physical silver] will force silver prices to increase much more than the gold market. That is also why you need to be concerned if you actually physically possess your silver. [You must] make sure you are using the best ETF possible to profit from the huge increase in higher prices. When you own a silver trust, you know it is physically backed and can deliver the silver so if there is a breakdown in the silver market structure, the premium for this trust would skyrocket.

China's Economy To Rebound In Q4

The Chinese economy is more likely to rebound in the October-December period from the slowest quarterly expansion in 14 quarters "with positive signs," the China Iron & Steel Association (CISA) said in a report released Monday.

Fixed-asset investment, particularly the construction of infrastructure projects, will continue to be the major driving force of the economy in the months to come, according to the CISA report.As the country posted better readings on investment, consumption and export in September, the CISA said, economic growth has stabilized in the third quarter and there is greater likelihood for a rebound in the coming months.

The report quoted Yi Gang, vice governor of the People's Bank of China, the country's central bank, as saying that the Chinese economy is expected to expand 7.8 percent in 2012, higher than the 7.5-percent annual growth targeted by the government.The CISA indicated that the government might introduce more measures to stabilize the economy in the wake of the 18th National Congress of the Communist Party of China, which is slated to open on Nov. 8

 "We can't rule out such a possibility," the CISA said, adding that an improving economy and higher prices will boost crude steel output in coming months, but weak demand from the property and manufacturing sectors will make a rapid recovery very difficult.

China's economy expanded only 7.4 percent year on year in the July-September period, marking the slowest quarterly growth in 14 quarters. China's crude steel output added only 0.6 percent year on year to reach 57.95 million tonnes in September, with the daily crude steel production accelerating 2 percent from the August level, according to data from the National Bureau of Statistics.

Easy Business Trend In Emerging Europe

Polish central bank governor Marek Belka doesn’t apportion a lot of importance to the fact that Poland can boast the second biggest improvement in the latest World Bank’s ease of doing business index, after Kosovo.

“This year we have improved, but I don’t care too much about it,”  Belka said at a meeting in London today.

As Charles Robertson, economist at Renaissance Capital, says in a note:

Emerging Europe has done the most to improve its rankings. Poland jumped 19 places, Ukraine rose 15 places, Mongolia increased 12, … Kazakhstan was up 7 places, Russia 6. Latin America has fallen back.

Others do see a significant trend emerging from the data around Poland which paints an optimistic picture for those wishing to start and do business in Europe, but not necessarily in the developed markets.

Uzbekistan is another climber in the 2013 index, albeit still lingering in the lower echelons of easy business on place 154.Armenia is on Poland’s heels as the world’s third most impressive upward mover, reaching 32nd place from last year’s 50th.

Perhaps unsurprisingly, doing business in Yemen and Syria has become more difficult over the last year, with the latter tumbling 17 places to 118th.Greece can hold its breath in the hope of attracting more business next year as it rose to 78th place, up 11 from 2012.

Beating all of those, Kosovo jumped up more than anyone else, 28 places in total, making it into the top 100 on place 98 according the ranking (although the ranking’s website says Poland is the biggest mover, their data indicates it’s Kosovo).

“There’s even a little (and much needed) good news for South Africa which improved 2 places,” Robertson observes, pointing to it reaching place 39, in spite of prolonged labour unrest in the country’s large mining sector.

Georgia may have shifted away from its U.S. allies after awarding victory in parliamentary elections to a more Moscow-friendly coalition early in October, but it did make the top 10 in 2013.

European Investment Summit – Online Conference On Oct 9 & 10

The new European Investment Summit 2012, scheduled for October 9 and 10, promises to change all of that.

Put together by the folks behind The Manual of Ideas, the European Investment Summit is a fully online conference, meaning no plane flights or costly entry fees.

Having just participated in my first investment conference this summer, they are great opportunities to hear ideas from top investment professionals.

However, the cost of attending these conferences is usually prohibitive (at least for those of us who are still full-time students), even before the travel arrangements and other costs.

The conference has managed to attract an amazing group of speakers and will focus on investment ideas in Europe – an area of focus lately given the economic turmoil in that region.

A few quotes from the Marks’ interview (emphasis mine):

“What the investor has to do is weigh out on the one hand price and on the other hand reality. Everybody thinks very dire thoughts about Europe and the Euro, and I would be the last person in the world to argue against that position. Then the next question is, European assets are lower in price because of the macro conditions, but are the macro conditions being viewed too pessimistically?”

“[U.S. Treasuries] are a safe investment in the sense that the outcome is known and not really subject to variation. I think they are not a good investment because the known outcome is an unattractive one. Today you can buy the ten-year [Treasury] and with no risk, lock up the certainty of 1.9% return for ten years. Is that really a good thing to lock up?”

“Tenet number three of our investment philosophy says we are active in less efficient markets only. We probably wouldn’t do a hedge fund forlarge-cap New York Stock Exchange firms because the tendencies are that those would be more efficient than others. But emerging markets, yes. Japan, yes.”