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Thread Title: SLV or AGQ, what does previous nights overseas affects on premarket bids?
Created On Tuesday April 26, 2011 11:46 AM
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akuracy503
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Tuesday April 26, 2011 11:46 AM

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I'd like to append this question to the ETF experts, what do spikes up or down in overseas trading usually do to next day NY opening bid prices, pre-market bid prices?

Which is a more solid pick for the smaller plays, let's say under $10k.




Edited: Sunday May 01, 2011 at 6:15 PM by akuracy503

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storm888
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Tuesday April 26, 2011 12:30 PM

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.

I view AGQ as slightly more treacherous than SLV.

BOTH track pretty well, but they are tracking different holdings.

For your likely purposes, SLV may be best. BUT, I don't like SLV
as a buy/hold play. I LOVE trading it on volatile days, but I don't
frequently hold it overnight.

I certainly would NOT hold SLV "longterm" and think I had a solid
and certain investment in "silver."

SLV is also a good hedge against physical holdings, but the costs
of using it as a SHORT-hedge have increased dramatically. (Even
tho ZSL is prolly a SCAM, it is an easier/cheaper hedge.)

........................................

I have been a longtime supporter of SLV and GLD.

I lobbied hard for their creation and have used them both very
successfully.

BUT....

lately, I have been worried about some aspects of SLV.

Too many folks are buying SLV as a substitute for buy/hold
physical silver. LOTS of those investors are "weak hands" and
can/will cause disruptions if/when silver tanks.

SLV is starting to look like a pyramid that is too reliant on "new
buyers." If/when unsophisticated "newbies" flee SLV in large numbers,
the impact on "physical" prices would be dramatic; due to the fact
that SLV has become such a large holder of the metal.

When new buyers come into SLV, the fund buys the metal. IF large
numbers of those buyers flee, the fund will be a MAJOR seller and
cause an artificial - perhaps temporary, perhaps permanent - down
trend; maybe even a crash.

All things considered, SLV has been worthwhile for the market but it
may have become too big and too much of a force on prices.

....................................

If someone does not already have substantial physical metals, NONE
of the ETFs are really the best way to invest in PMs. They are all
designed as trading vehicles; not as a way to "own" metals longterm.







-------------------------
Folks Who Bite Get Bitten. Folks Who Don't Bite Get Eaten.

Edited: Tuesday April 26, 2011 at 12:32 PM by storm888

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derryb
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Tuesday April 26, 2011 12:40 PM

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ETF SLV tracks spot price of silver; if silver spot increases 5% SLV increases 5%. AGQ is a 2x leveraged ETF that does twice what silver does on a daily investment; if silver price increases 5%, AGQ increases 10%. With silver at 45 and AGQ at 317.00 at the same time, a 5% increase in silver is only $2.25 while a corresponding AGQ 10% increase is $31.70. Beware, it has the same affect on price in a downturn.

Bottom line: SLV will do about what the price of silver does. AGQ will increase (or decrease) twice the percentage of what silver price does. AGQ has more loss potential but at the same time it has more gain potential. Advisors say that AGQ is not for more than daily or short term holding but in a bull market it has worked well for me in most cases to just hold (except days like today).

My novice advice is this: If you think silver is going to continue it's bull trend, pick what you think is the low in this current dip and go with AGQ. To play it safer go half SLV and half AGQ, but you definitely want to be in AGQ in a silver price rise. You don't want to be in it in a price fall, but it helps if your buy price was fairly low compared to current price. Remember that AGQ price is twice as volatile as that of SLV, so it is not for those with a bad heart. If you a hardcore gambler, then it is definitely for you.

ETF database

-------------------------
PM me for step by step Mr. Rebates instructions and get an additional 1% on ebay. “The only thing trickling down on the former middle class from the Fed is warm and yellow.” - Jim Quinn

Edited: Tuesday April 26, 2011 at 12:56 PM by derryb

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cohodk
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Tuesday April 26, 2011 12:40 PM

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AGQ is not for inexperienced traders (investors). If you do not understand the concept of compounding, you should not invest in this product.



but I will wait it out since I got in at $60

Didnt you write yesterday that you just bought 2400 shares near yesterdays low? I admire you conviction on this trade, but just hope you know what you're doing.

Edited: Tuesday April 26, 2011 at 12:57 PM by cohodk

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guitarwes
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Tuesday April 26, 2011 12:43 PM

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Great info guys, thanks.


-------------------------
LINK TO EBAY STORE......."Nothing sedates rationality like large doses of effortless money." -Warren Buffett

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storm888
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Tuesday April 26, 2011 12:55 PM

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<< ETF SLV tracks spot price of silver; if silver spot increases 5% SLV increases 5%. AGQ is a 2x leveraged ETF that does twice what silver does on a daily investment; if silver price increases 5%, AGQ increases 10%. With silver at 45 and AGQ at 317.00 at the same time, a 5% increase in silver is only $2.25 while a corresponding AGQ 10% increase is $31.70.

Bottom line: SLV will do about what the price of silver does. AGQ will increase (or decrease) twice the percentage of what silver price does. AGQ has more loss potential but at the same time it has more gain potential. Advisors say that AGQ is not for more than daily or short term holding but in a bull market it has worked well for me to just hold (except days like today, but I will wait it out since I got in at $60).

ETF database
>>




//////////////////////////////////////////////////////////////////////////////


As I noted, both track "pretty well."

AGQ is tracking LOTS of different kinds of "paper."

SLV is tracking bullion, because it OWNS bullion.

AGQ, as far as I know, has never owned an ounce of physical
silver. (Not that there is anything inherently wrong with that.)

........................................................................................

As noted in the notes/disclaimers, AGQ "does not invest directly in commodities."


AGQ -- See Notes/Disclaimers At Bottom Of Page Two







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Folks Who Bite Get Bitten. Folks Who Don't Bite Get Eaten.

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derryb
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Tuesday April 26, 2011 1:03 PM

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<< As I noted, both track "pretty well."

AGQ is tracking LOTS of different kinds of "paper."

SLV is tracking bullion, because it OWNS bullion.

AGQ, as far as I know, has never owned an ounce of physical
silver.
>>



ProShares Ultra Silver (AGQ) seeks daily investment results, before fees and expenses, that correspond to twice (200%) the daily performance of silver bullion as measured by the U.S. Dollar fixing price for delivery in London. They both track and are tied to the price of bullion silver. AGQ is not backed by silver and is nothing more than a derivative. This, however, does not lessen it's ability to make (or lose) money for those that trade in it. It's leverage feature actually allows one to make (or lose) more money than going with something that is backed oz. for share with bullion. It was specifically designed with the gambler in mind and in the right hands (especially in a bull market) can provide much greater rewards.

For my physical needs I hold physical. I could care less if my paper is backed by physical. It's only paper and I'm only using it to make green paper gains. Anyone holding paper needs to stay on top of political/economic events and get out of paper when events dictate. The only advantage to paper backed by physical occurs when those that want to convert to physical (why not just buy physical) do so, usually at an additional cost. In an economic crunch I doubt that paper backed by physical will be worth any more than derivative paper. The only exception to this would be allocated accounts, and even then an economic crisis would probably require lawyers to get you posession of your allocated metal.

-------------------------
PM me for step by step Mr. Rebates instructions and get an additional 1% on ebay. “The only thing trickling down on the former middle class from the Fed is warm and yellow.” - Jim Quinn

Edited: Tuesday April 26, 2011 at 1:20 PM by derryb

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mc68386
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Tuesday April 26, 2011 2:45 PM

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<< .
When new buyers come into SLV, the fund buys the metal. IF large
numbers of those buyers flee, the fund will be a MAJOR seller and
cause an artificial - perhaps temporary, perhaps permanent - down
trend; maybe even a crash.
>>



I've had this exact concern. SLV makes up for the imbalance between its supply/demand and that of actual silver by buying or selling bullion at market price. I used to have a pretty good idea what the rules were but I've since forgotten. But it looked to me like if there were panic selling of SLV, huge amounts of bullion would have to be dumped on the market regardless of whether there are buyers. This would depress bullion and accelerate sales of SLV - a vicious circle that might not end until the price of both SLV and silver are deep in the toilet.

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Joflax
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Tuesday April 26, 2011 3:40 PM

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Correct me if I am wrong but I have a feeling that SLV is treated as a "collectible" and subject to higher tax rate than ACQ on profits.

-------------------------
Buy the dips!!!

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storm888
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Tuesday April 26, 2011 3:47 PM

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<<

<< .
When new buyers come into SLV, the fund buys the metal. IF large
numbers of those buyers flee, the fund will be a MAJOR seller and
cause an artificial - perhaps temporary, perhaps permanent - down
trend; maybe even a crash.
>>



I've had this exact concern. SLV makes up for the imbalance between its supply/demand and that of actual silver by buying or selling bullion at market price. I used to have a pretty good idea what the rules were but I've since forgotten. But it looked to me like if there were panic selling of SLV, huge amounts of bullion would have to be dumped on the market regardless of whether there are buyers. This would depress bullion and accelerate sales of SLV - a vicious circle that might not end until the price of both SLV and silver are deep in the toilet.
>>



/////////////////////////////////////////////

I agree with derryb that when making paper trades it is
mostly irrelevant whether or not there are any actual
metals in the pot. The trades are designed to place in/out
bets. Changing inflows/outflows of gamblers - betting on
derivatives - is not going to instantly harm the physical market.

As mc68386 notes, SLV is a different critter.

When folks were lobbying for SLV/GLD, it was never contemplated
that there might be "unintended consequences" of the kind that
now have to be faced.

The initial concern was simple: Do the ETFs actually have the metals
to back the paper? That was a reasonable question and it was
addressed to the satisfaction of the regulators. NOW, the fact that
SLV has sooooooo much silver has become the potential problem
for folks holding BOTH physical metals AND their derivatives.

It would be comforting to think that most SLV investors/gamblers
were sophisticated traders; it would likely be VERY untrue. MOST
of them can be FAR more easily spooked out than can the folks
who read these forums. They have, largely, been touted into SLV
by watching television; they view SLV as a "stock," and when a
trend seems to be shifting they wanna get out immediately.

$13.5-BILLION+/- is today's value of SLV. That must be a fairly
large percentage of the total silver market. If even half of that
amount of silver hit the market all at once, the prices would
be ugly.

Physical holders certainly benefit when SLV is attracting new blood.
But, they could be killed by an out Exodus. And, as noted, that flight
could/would feed on itself until the price was a small fraction of the
value today.

The SLV contagion would then spread to other metal-ETFs and the
silver price would rapidly crash.

Without eliminating such ETFs, I have not a clue how to eliminate
that risk. And, remember, eliminating SLV tomorrow would deal
the hypothetically/prospectively devastating blow IMMEDIATELY.

Tiger by the tail; can't hold on much longer, can't let go. ohmy.

..............................

There would NOW be an upside for the SHORT-banksters, if SLV
were declared a revoked security and forced to dissolve/liquidate.

Maybe that is how the banksters will try to save themselves.









-------------------------
Folks Who Bite Get Bitten. Folks Who Don't Bite Get Eaten.

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storm888
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Tuesday April 26, 2011 3:57 PM

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<< Correct me if I am wrong but I have a feeling that SLV is treated as a "collectible" and subject to higher tax rate than ACQ on profits. >>



///////////////////////////

Yup.

Page 39 of the SLV Prospectus.


pg 39 / SLV



-------------------------
Folks Who Bite Get Bitten. Folks Who Don't Bite Get Eaten.

Edited: Tuesday April 26, 2011 at 3:58 PM by storm888

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derryb
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Tuesday April 26, 2011 4:20 PM

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<< Correct me if I am wrong but I have a feeling that SLV is treated as a "collectible" and subject to higher tax rate than ACQ on profits. >>


AGQ is treated is a schedule K partnership for tax purposes. You will receive a schedule K-1 from the fund with the information needed for your tax return. Don't know about SLV, never researched it.

"Schedules K-1
Most partnerships, as pass-through entities, do not pay federal income tax. A
partnership must file an annual information tax return with the IRS (Form 1065) in
which it reports all items of taxable income and deductions. This filing includes
Schedules K-1 (“K-1s”) that detail each partner's respective share of taxable
income and deductions. Partners pay tax on their distributive share of partnership
income (or deduct a loss) on their personal federal income tax return (regardless
of whether the partnership profits were actually distributed to them
)."

Maybe one of our professional tax law forum members will pipe in and explain what this means to the investor.

If the SLV or AGQ investment is held in an IRA, there are no annual tax reporting requirements or taxes due on gains. Withdrawals from traditional IRAs get reported and taxed (at the taxpayers current tax rate) in the year withdrawn. ROTH IRA gains or withdrawals are not taxed. My paper holdings are in IRAs, therefore tax consequences do not affect the type paper I purchase. Tax consequences do affect my preference of the ROTH over the traditional IRA.

-------------------------
PM me for step by step Mr. Rebates instructions and get an additional 1% on ebay. “The only thing trickling down on the former middle class from the Fed is warm and yellow.” - Jim Quinn

Edited: Tuesday April 26, 2011 at 4:44 PM by derryb

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storm888
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Tuesday April 26, 2011 4:50 PM

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...Partners pay tax on their distributive share of partnership
income (or deduct a loss) on their personal federal income tax return (regardless
of whether the partnership profits were actually distributed to them).



///////////////////////////////////////////

There are a good number of ETFs that fall into that scheme.

In theory - maybe in practice sometimes - a "partner" can
LOSE money on his investment AND still have a tax liability.











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OnlyGoldIsMoney
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Tuesday April 26, 2011 4:53 PM

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<<

<< Correct me if I am wrong but I have a feeling that SLV is treated as a "collectible" and subject to higher tax rate than ACQ on profits. >>



///////////////////////////

Yup.

Page 39 of the SLV Prospectus.


pg 39 / SLV
>>



That collectible status is one of the reasons I purchase SLV only to boost my IRA. SLV has done wonders for my pension's value. I only hold shares shares a matter of days in hit and run style.



-------------------------
Mark's Liberty Quarter Eagles - No End In Sight collection, Registry Set Liberty Head $2-1/2 Gold with major varieties


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mc68386
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Tuesday April 26, 2011 5:49 PM

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Another thing about SLV I think about sometimes... since SLV bullion holdings grow steadily as the price goes up, isn't there theoretically a price where SLV would have to own every ounce of silver in the world to back the shares? If so, what is that price? And what happens when it passes that price?

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derryb
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Tuesday April 26, 2011 6:29 PM

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<< Another thing about SLV I think about sometimes... since SLV bullion holdings grow steadily as the price goes up, isn't there theoretically a price where SLV would have to own every ounce of silver in the world to back the shares? If so, what is that price? And what happens when it passes that price? >>


It would take a gazillion ounces.

Many ETFs take the partnership fund route because it relieves them of any tax liability but creates a nightmare in getting K-1s out to everyone who owned any shares during the year. This year mine arrived just before tax deadline.

Here's a couple of good links that discuss taxes and commodity EFTs:

Precious Metal ETFs and taxes

Commodity ETFs and Schedule K-1

Proshares K-1 tax FAQs

-------------------------
PM me for step by step Mr. Rebates instructions and get an additional 1% on ebay. “The only thing trickling down on the former middle class from the Fed is warm and yellow.” - Jim Quinn

Edited: Tuesday April 26, 2011 at 6:41 PM by derryb

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jmski52
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Tuesday April 26, 2011 6:38 PM

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(Even tho ZSL is prolly a SCAM, it is an easier/cheaper hedge.)

LoL - Quote of the Day!

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Q: Are You Printing Money? Bernanke: Not Literally

I knew it would happen.

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akuracy503
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Thursday April 28, 2011 2:43 PM

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Thank you AGQ

Most Thanks goes to those that recommended AGQ exposure.

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roadrunner
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Thursday April 28, 2011 6:36 PM

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SLV (like GLD) can be used to pay off delivery for Comex contracts if they find the need to do that. There's no telling how close to 95-100% SLV owns in real physical silver
since there are so many caveats in the prospectus. I figure if the means, motive, and opportunity is there (and it is), then there is no reason why JPMorgue and HSBC along with
the custodians and sub-custodians haven't created a semi-Ponzi scheme of paper. They've done it in every other aspect of trading and finances, so why not here? As long as Peter
doesn't complain, and both Peter and Paul are making money on paper....it's all good.

Another angle on SLV is that with the silver they do have, Chinese traders and others are taking large positions in order to cash out with bullion. They can't do that on the Comex
without creating a stink. Only large shareholders of GLD and SLV are allowed to walk away with bullion when they cash out. For now, SLV is one of the best sources of easy and
cheap bullion out there. Buy large amount of paper shares.....then sell shares and request delivery. Lather, rinse, repeat. If you can get thousands of people doing this routinely.
the silver can be removed.

roadrunner



-------------------------
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Overdate
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Thursday April 28, 2011 9:27 PM

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<< SLV makes up for the imbalance between its supply/demand and that of actual silver by buying or selling bullion at market price. I used to have a pretty good idea what the rules were but I've since forgotten. But it looked to me like if there were panic selling of SLV, huge amounts of bullion would have to be dumped on the market regardless of whether there are buyers. This would depress bullion and accelerate sales of SLV - a vicious circle that might not end until the price of both SLV and silver are deep in the toilet. >>

Not necessarily, it would depend on who the buyers were and what they decided to do with their cheap SLV shares. Most likely they would hold for higher prices or use their shares as trading vehicles. Unless the buyers decided to "cash in" their stock for physical silver, and then take an immediate loss by dumping this silver into the market at ever lower prices (which makes no sense), the effect on the physical silver market would be nil.

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