Want to dump your gold and silver this morning? Before you do, check out this video from one of my favorite YouTube channels. After all, with demand for physical in liftoff and prices crashing, we're experiencing a market (or market illusion) unlike any that the econ textbooks predict. What does it mean?
In the end, I guess it means something different for each of us. A highly leveraged trader is in trouble, or perhaps kicked out of his trade already. A long-term accumulator may be in a very different situation. "Look! It's on sale!"
The real question is, what does it mean to you?
Showing posts with label Silver. Show all posts
Showing posts with label Silver. Show all posts
Take Possession of Your Gold and Silver
The following is from another fascinating post on Zero Hedge:
I have no idea who first said that gold has no counterparty risk. It's quite likely that I first saw the idea expressed by Bill Bonner in his Daily Reckoning. In any case, it's probably worth considering that idea at least one more time.
Insurance contracts, stocks, mutual funds, ETF's, CDs, annuities, bonds, dollars, and a host of other investments all share one potentially fatal flaw. Each is only as reliable as some party on the other side of the equation.
A gold or silver coin in your hand is an entirely different matter. While it's true that you may need another party to trade it to, thousands of years of history suggests that your gold or silver coin will remain a safe store of value.
And please note that I did say "in your hand." Iin good times or even fair times I have a reasonable amount of faith in GLD, SLV, Perth Mint Certificates and the like. It seems fairly likely, though, that we have bad times ahead. Plan accordingly.
"While Gerald Celente is crying about his lost six-figure account, Bill Fleckenstein also has personal money tied up with MF Global. He is hopeful that he will get it back but is critical of the authority figures involved. Celente does not expect to get all of his money back. Ann Barnhardt of Barnhardt Capital Management has shuttered its operations after six-years in the business. She did not feel like her clients’ funds were safe in the futures and options market any more. Lawrence Lepard, who posted on Zero Hedge, wonders if the MF Global failure was a hit job done by the Fed. My point is not about who is right or wrong . . .The author, in addition to coining the phrase "fractal in a frying pan," makes the point that a global banking meltdown we are all at great risk of losing assets we believed to be safe.
I have no idea who first said that gold has no counterparty risk. It's quite likely that I first saw the idea expressed by Bill Bonner in his Daily Reckoning. In any case, it's probably worth considering that idea at least one more time.
Insurance contracts, stocks, mutual funds, ETF's, CDs, annuities, bonds, dollars, and a host of other investments all share one potentially fatal flaw. Each is only as reliable as some party on the other side of the equation.
A gold or silver coin in your hand is an entirely different matter. While it's true that you may need another party to trade it to, thousands of years of history suggests that your gold or silver coin will remain a safe store of value.
And please note that I did say "in your hand." Iin good times or even fair times I have a reasonable amount of faith in GLD, SLV, Perth Mint Certificates and the like. It seems fairly likely, though, that we have bad times ahead. Plan accordingly.
Porter Stansberry: Bullion over ETF's
The following quote is by Porter Stansberry from Stansberry's Investment Advisory. It's a paid subscription, so please don't expect to see the full text via that link unless you're willing to subscribe.
The reason I couldn't resist this quote though, is that it makes two really vital points. The first is that investing in precious metals ETF's is very different from investing in precious metals bullion. The results may be similar--last year, this year, next year, and beyond. But someday, they made the diverge dramatically, and perhaps even catastrophically, for those who have relied on ETF's.
The other key point, which is implied if not stated, is that we may not recognize the difference between ETF and bullion until a run on bullion (and crashing ETF prices) occurs. At that point, of course, it will be too late to adjust your holdings without suffering significant financial loss.
"I believe it is critical to hold physical bullion, not an exchange-traded fund (ETF) that invests in gold. The volume of contracts that trade on the futures markets (where ETFs control a lot of metal) dwarfs the amount of actual physical gold in the entire world. This indicates two things to me...
First, the price of gold is likely depressed by selling in the futures markets. Whether that's a conspiracy or simply good trading, I can't say. . . But whether the price of gold and silver is manipulated doesn't really matter to me because, like it or not, the price is eventually going higher.
The second thing the volume of futures trading relative to the supply of gold tells me is... sooner or later... there will be a run into physical gold. When that happens, the futures markets will collapse because there won't be enough metal to meet demands for physical delivery."I don't often use a quote unless I can link to the original material. I made an exception here for a couple of reasons. First, I think Stansberry has a lot on the ball. You might even want to subscribe.
The reason I couldn't resist this quote though, is that it makes two really vital points. The first is that investing in precious metals ETF's is very different from investing in precious metals bullion. The results may be similar--last year, this year, next year, and beyond. But someday, they made the diverge dramatically, and perhaps even catastrophically, for those who have relied on ETF's.
The other key point, which is implied if not stated, is that we may not recognize the difference between ETF and bullion until a run on bullion (and crashing ETF prices) occurs. At that point, of course, it will be too late to adjust your holdings without suffering significant financial loss.
Jim Rogers: Heads I Win; Tails I Win
In this video, Jim Rogers tells us again that commodities are positioned to outperform regardless of which way the economy goes. He is high on many commodities, including gold, sugar, rice, etc.
Why? That's simple. Agriculture has been a lousy investment for 30 years. The resulting underinvestment is certain to lead to higher prices. Kind of like a pig in a python.
Rogers predicts that gold will hit $2,000 within 10 years. But as he points out, that's really not a very outlandish position given our current circumstances.
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Why? That's simple. Agriculture has been a lousy investment for 30 years. The resulting underinvestment is certain to lead to higher prices. Kind of like a pig in a python.
Rogers predicts that gold will hit $2,000 within 10 years. But as he points out, that's really not a very outlandish position given our current circumstances.
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What is a good purchase price for silver or gold?
As always, the people at the National Inflation Association are right on the money when it comes to silver and gold prices. If you're thinking of paying much more than they suggest below--think again.
It's worth noting that you can actually buy silver at spot price in the form of 40% silver Kennedy half dollars (and BELOW spot price if you buy the old 35% silver nickels). I prefer the Kennedy halves as they are so easily recognizable, but below spot has a lot of appeal.
The rest of their opinions on this page are interesting too, but they remind me of one of my favorite quotes:
"It's hard to make predictions, especially about the future"
I'll leave it to you to determine who actually said it, but it sounds like Yogi Berra to me!
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1) How much over spot is a good price for silver and gold?
A good price for a 1 oz silver coin like an American Eagle or Canadian Maple Leaf is 12% over spot, and a good price for a 1 oz silver bar is 6% over spot.
For gold, a good price for a 1 oz gold coin like an American Eagle or Canadian Maple Leaf is 4% over spot, and a good price for a 1 oz gold bar is 2% over spot. The larger premium for silver compared to gold indicates a shortage in the physical silver market.
It's worth noting that you can actually buy silver at spot price in the form of 40% silver Kennedy half dollars (and BELOW spot price if you buy the old 35% silver nickels). I prefer the Kennedy halves as they are so easily recognizable, but below spot has a lot of appeal.
The rest of their opinions on this page are interesting too, but they remind me of one of my favorite quotes:
"It's hard to make predictions, especially about the future"
I'll leave it to you to determine who actually said it, but it sounds like Yogi Berra to me!
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What will happen in an honest precious metals market?
The National Inflation Association sent out a great letter yesterday. It's a comprehensive look at the Andrew Maguire/CFTC situation. Bottom line? To feel safe buying precious metals now, you don't have to believe that metals will rise, only that the dollar will ultimately fail.
I strongly recommend reading the entire letter, and subscribing to their newsletter while you're there.
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The silver market provides a window into what is happening in the gold market. Because the silver market is very small and its short position is so concentrated, its price is easier to manipulate than gold, but the same manipulation is taking place in gold on a much larger but less noticeable scale. In our opinion, the CFTC is under pressure not to do anything about the manipulation because the lower gold and silver prices are, the stronger the U.S. dollar appears to be. If we saw an explosion to the upside in gold and silver prices, it would result in a complete loss of confidence in the U.S. dollar.
I strongly recommend reading the entire letter, and subscribing to their newsletter while you're there.
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