I overheard the owner of the company i work for talking with his partners about selling 90% of his silver....?

Question

They were speculating that the price of silver was about to plummet due to a massive influx of silver from new mines in China, and that he did not want to be stuck with it. He keeps this in several vaults along with other valuables. The vaults are each bigger than my living room. The silver is stored on pallets, so we are talking about several TONS of silver bars. My question is: how can I best position myself to capitalize on the soon to plummet price of silver? Isn't there a way to "bet" that the price will drop over the next several months? I seem to recall reading about this happening in the commodities market regularly, is there a similar setup for metals? What is it called, and how do i set that up? thanks

I know for a fact that the silver HE is about to dump is going to affect the price. He and his partners are really into buying up silver, so i do not think they would be discussing selling it all if they did not think they HAVE to. As to the new mines beginning production soon I understand that it is not yet common knowledge.

Answer 1

Speculating=guessing. Is that smart for you to risk your money on someone's guess? You need to get facts and study those facts before doing anything else.

Answer 2

Good answer by Common Sense. Shorting the SLV etf is the easiest way to take advantage of a decline in silver prices.
I also would not do this. There may be an increase coming in production but demand is increasing also. Coming is also a key word. The price won't go down till these new mines are close to producing output. You have to pay interest on your short sale until you cover so timing is important.
The current weak dollar also causes an increase in metal prices. Dollars are worth less so it takes more of them to buy an ounce of silver.
BTW what relevance does that info from January have? This week SLV was up from 126 to 134.19. At its recent low a month ago it was 115. The first week in January it was under 130.

Answer 3

I disagree with anyone who thinks precious metals are dropping because of new deposits found. Interest rates were cut, and may be cut again in October. Inflation is skyrocketing and the value of the dollar at an all time low. Along with many other factors that come into play, silver and gold prices are going up. Oh wait, gold hit record highs two days in a row last week. Silver has been performing well. I'm sure a large influx of silver could bring prices down, but it will take time for that to happen. And, I believe that the overall economic conditions are pointing to increased commodity prices. When Warren Buffet buys one of the largest above ground silver deposits for his company, Berkshire Hathaway, then maybe it's because he understands how global economics work. When your boss sells silver because of new mines in China, maybe it's because he's a pawn of generic investment analysts who really don't have a broad picture of global financial economics.

Answer 4

You can simply "short" the ETF: SLV

You do this by opening a "margin" account with almost any broker (discount would be best, cost of a trade $14 or less).
You will pay interest on the "short". So compare rates for margin also.

Now... would I do this. No way. If it was really true about the influx of silver from China... it would already be reflected in the price action... which has been going up. Silver may fall, but I doubt for this reason.

Answer 5

I heard the same thing about the new mines in china, my boss was freaking out about it, he owns several car dealerships, and he sold all of his silver that same day. Said he heard that the price was about to fall and fast. Of course it wasn't that much silver, i think he had like 10,000 ounces which is what? 500 pounds? still, i would like to do the same thing you are talking about, but i only have around 5,000 to invest in it. If the big boys are sweating that much it must be something to it. My boss was very mad, yelling at the guy who buys stocks and stuff for him to get rid of it immediately and sell short, what ever that means. i know those prices go up and down daily, and this would be a good way to make some much needed cash. i will look into this on monday.

Answer 6

Well they just found the 6th largest gold deposit on earth there, too, so expect gold to drop a bit once they get THAT going:

"It is the largest Carlin-type gold deposit in Asia, with gold resources amounting to 308 t of gold; and ranked sixth in the world, China`s People`s Daily Online reported."

here is the link to the article, written 9/18/2007:

http://www.chinamining.org/News/2007-09-18/1190096348d7084.html

also check out this:

" Silver Dragon Identifies 429,800 Tonne Ore Reserve Containing Ag-Cu Deposits from Initial Exploration Work at Zhuanxinhu, China"
http://www.empirerelations.com/news/sdrg/sd021207.shtml

and this:

January 24, 2007 - Silver Dragon Identifies 612,000 Tonne Ore Reserve Containing Ag-Pb-Zn Deposits From Initial Exploration Work at Dadi, China
http://www.empirerelations.com/news/sdrg/sd012407.shtml

that is just the tip of the iceburg.. look at this article exerpt from Dubai ( a middle eastern (RICH) country) after word got out. Silver bubble is about to go pop goes the weasel!

"silver prices sank lower surrendering their previous gains. For the week, gold prices suffered a set back of 4.43% while silver prices witnessed a steeper fall of 6.15%. During the week, DGCX surpassed its previous record for highest number of contracts traded in a day since inception to set another new record. A total of 6954 contracts valued at $203.26 million were traded beating the earlier record of 6714 contracts achieved on December 29, 2006. The near term gold futures clocked their highest-ever traded volume in a day at 6047 contracts. During the week, the Exchange recorded a total volume of 16,302 contracts valued at $567.78 million (based on closing prices)."

Answer 7

You can sell short the ETF SLV if you want to believe him.