Or even Silver for that matter

I am not nor have I ever been a commodities trader. However, I have always had a love of numbers and modeling various systems in an attempt to gain insight into the possible future behavior of those systems. The comments posted by Augustus prompted me to see if I could modify one of those models to analyze the current situation with the prices for precious metals in particular silver.

I agree with Augustus! Silver is due for a correction and I believe his estimate of the timing is fairly accurate as well. I do not see the correction being as severe as he predicted. My modeling suggests that when silver prices do correct themselves we are looking at them finding support in the $16.00 to $16.25 per ounce range. (Please bear in mind that I do not have nor does anyone really have that magic crystal ball with all seeing knowledge of the future. This is just MY best guess as to what might happen.)

For this correction to happen a couple of key things also need to happen. Supply needs to seriously outpace demand. That appears to be starting to happen with projected supplies moving up to about 1 million more ounces than projected demand. The public needs believe that the United States is recovering from the recession. Whether the economy really is recovering is not important, it is what the public believes is happening. Right now it seems that most people are sitting on the fence. The pending fall out from the Health Care Bill is still not certain and who knows what else Congress will try to shove down our throats for our ?benefit?. Finally, there needs to be a sense of stability in the Middle East, Iraq and Afghanistan. While things seem to be calming down right now, I have to wonder if they will or will not flare up in the spring again.

I look for the correction if and when the price of silver cannot hold the psychological level of $17.50 per ounce. Another big factor in my belief that a correction is coming is the current public feeding frenzy for precious metals. I have always believed when John Q. Public buys heavily into markets, stocks, metals, etc., the market was overvalued. If you want to see this feeding frenzy, you have to look now further than EBAY. Silver, in all forms, bars, graded coins, and raw coins is commanding too much of a premium and people are sucking it up, all of it. I find myself asking how many of the people buying the silver are really informed collectors and how many are just trying to get their hands on as much silver as possible in a panic play to hedge against perceived economic disaster. I suspect there are far more of the later. For right now, I am holding on to my silver with every expectation that after the price of silver corrects itself that it will once again continue its upward climb.

In the mean time, if I cannot acquire a silver coin at what I consider a fair price I let it slide and shake my head at the prices up to which these coins get bid. That does not mean that there are not some very good deals out there to be had. I have found that while the public is devouring the silver coins, they are all but ignoring the collectable value of modern clad coins. Even copper is being somewhat ignored. Just last night I picked up a PF70 Clad State Quarter for the set I am building for about $10.50 with shipping included. That is significantly less than $0.20 on the dollar of book value. In fact, a good number of modern PF70 clad coins can be had for less than $0.30 on the dollar of book value. So, if you are looking to populate a modern set, now might just be one of the very best times to get those non-precious metal coins.