Have you ever been in on a really hot fad like owning OP shorts, parachute pants, or even a wearer of those cool yellow Lance Armstrong wrist bracelets when you are shocked to learn that the biggest loser or dork is wearing them too? Suddenly the trinket or item isn't so cool huh? Remember that feeling, cause that is how I felt when I saw this video from Business Insider featuring one of the most famous investors that have a knack for making terrible calls at the worst of times. (Bear Stearns anyone?).
I would agree with Jim as I noticed this week that the markup over spot for Silver American Eagles at one of the lowest mark up dealers (that I've bought a lot from) is now at $3.60 per ounce over spot! This actually changed from just one week ago when they were at $2.60 over spot. (mind you I'm talking purchases of more than 500 ounces at a time for this price). I thought it odd on their website because they said they would not sell Silver Eagles because they felt that the mark up was too high. I guess they felt the pressure. So, if there is this kind of pressure to buy at any price, we know that we should probably be looking for an exit. These kind of manias can go on longer than we think, but this is a BIG WARNING that people are buying at any cost.
So, we have warning #1 – we see dealers marking up the cost to buy AND there is still a crazy demand (say bubble with me).
As I mentioned earlier today in the post about Fed Governor's comments about inflation, copper is looking sick and it will take down the rest of the commodities complex with it. Silver and gold will not be immune to a copper crash. Please review the post on inflation and Bullard's comments at MINISTRY OF DISINFORMATION – BULLARD SPEAKS.
Jim Cramer is actively commenting and favorable on a position in physical silver. This should cause you to call your precious metal dealer and arrange for UPS delivery to them right now.
There may be room to run on silver, but most of all, it seems to be getting a bit crowded. BE CAREFUL!