If precious metals prices are being held down........
jmski52
Posts: 22,897 ✭✭✭✭✭
.........then it seems to me a good strategy is to buy fairly regularly with some discretionary funds and hold, like a longterm savings plan.
Since prices are artificially low, what does it matter if they stay low? If prices rise, so much the better. If markets are being manipulated, then you have the real thing, at a low entry price. If they are still low when you sell out, you've preserved your capital.
If you have averaged in over time and keep good records, you can sell some of your position that has a gain and at the same time you can sell some of your position that might have a loss. Net result - you can take money out of your stash with no tax consequence, as long as you do it evenly. In this case also - you have preserved your capital.
Chances are that inflation will keep you in the plus column over time, and the biggest worry you will have is the tax. The real plus is being able to carry on without the worry of a financial system meltdown in paper assets. Yes, you probably need some cash in reserve, but not a huge amount - just enough to cover expenses for 6 months or so.
Best of all, you aren't playing with the naked shorts. You are forcing their hands, even in a small way - it helps.
Since prices are artificially low, what does it matter if they stay low? If prices rise, so much the better. If markets are being manipulated, then you have the real thing, at a low entry price. If they are still low when you sell out, you've preserved your capital.
If you have averaged in over time and keep good records, you can sell some of your position that has a gain and at the same time you can sell some of your position that might have a loss. Net result - you can take money out of your stash with no tax consequence, as long as you do it evenly. In this case also - you have preserved your capital.
Chances are that inflation will keep you in the plus column over time, and the biggest worry you will have is the tax. The real plus is being able to carry on without the worry of a financial system meltdown in paper assets. Yes, you probably need some cash in reserve, but not a huge amount - just enough to cover expenses for 6 months or so.
Best of all, you aren't playing with the naked shorts. You are forcing their hands, even in a small way - it helps.
Q: Are You Printing Money? Bernanke: Not Literally
I knew it would happen.
I knew it would happen.
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Comments
Nice commentary jmski52. It makes sense to me and I like the collecting side of the equation even more.
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You still need/want to buy in as CHEAP as possible.
Buying at $21 and selling at $13 is not "preserving capital."
Averaging down is an OK concept when you get trapped,
but it is better not to get trapped.
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Monday gave ZERO indication of where silver is headed.
There were some amateur bottom-fishers buying SLV.
Friday Vol was near 21M
Avg Vol is about 7.3M
Monday Vol was about 9M
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I dunno.
do not have to settle until Wednesday or Thursday. If
a bunch of folks don't pay, there could be more tanking.
Folks using really tight stops from these levels will also
be targetted by the MMs, when possible. This can put
more downward pressure on the price.
LONGS should use no stops, if they can stomach the risk.
If not, the stops should be as loose as is comfortable.
The MMs harvest the tight stops routinely.
That 3% to 5% percentage is a core position, not a trading position. It is a form of insurance against certain economic or political scenarios that haven't taken place in America, but have in other countries. In my mind, those who are trading the precious metals via ETFs, mining stocks, futures, or options, should not be reading coin boards for information purposes, advice or reassurance. My main interest here is for looking at sentiment, especially the newbies. When newbies are mostly on one side of the fence, the odds tend to be good on the other side.
As for sudden big drops, some call them "black swan" events, and while rare a person will see them once every three to ten years depending on which market you are looking at. They can occur on the upside as well as the downside, and if a black swan event will wipe a trader out, that person is overexposed. That overexposed person will be out of the game sooner rather than later, because the swans do show up eventually, three to ten years depending on the market.
Personally, I don't worry about manipulation. There's nothing that I can do about it, if the stories are true. If there is manipulation going on, it is far more likely that the stories getting out are bent all out of shape with maybe 5% to 10% truth. In the spook intelligence world (eg CIA, KGB) there are elaborate methods to get bad and false information to the enemy, while convincing the enemy that the leaks are good information. Any group that can manipulate the market, has the resources and smarts to play that game with the newsletter writers. A person can read some spy novels for simple forms of this.
Overall, I would prefer to be coat tailing the manipulators than trying to fight them. If you can't beat them (and I can't), I would prefer to follow them and make money. Folks with enough money and smarts to manipulate multi-billion dollar markets can run rings around newsletter writers.
/edit typos
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That is why I called the SHORT when I did. Just too obvious.
And, a 3% to 5% - or more - stash is fine. Folks who can afford less
should still have a little; folks who can afford more should do so.
Ya think?
Buying at $21 and selling at $13 is not "preserving capital."
Nobody said that it was. Who in their right mind thinks that?
When you use an averaging in approach to buy physical metal, you are necessarily on the LONG side of the market. When you buy at $5, and $6, and $12, and $21, and $13 you are insulated from market manipulation.
More importantly, you OWN the metal and their is nobody on the other end of a trade who is trying to take your money by using borrowed silver that doesn't exist.
When you engage in short-selling with the intention of dove-tailing along with the manipulators or even hedging a long position, you are playing with silver that may or may not exist. You are also paying interest in a margin account.
When you are short-selling, you must be engaged 24/7 and you are compelled to be right more often than you are wrong - on a short term basis, in a volatile market, based on a momentum play. Hah! Good luck.
When you invest in physical metal, you are concerned with different indicators of the market than technically-based computer buy/sell paradigms that are based on market internals and momentum. In my view, government policies toward investment bank bailouts, Fannie Mae & Freddie Mac, false reporting of inflation data, creeping socialism and bad energy policies ALL point toward devaluation of the dollar.
It's my personal opinion that arbitrage is great for those who practice it will full access to critical information, but that an accumulation strategy in physical metals with an eye on the fundamentals will provide the best results with the least amount of risk.
And besides that, when you accumulate physical metal you are bringing illicit naked short selling one day closer to the day of reckoning, which also means that it's one day closer to a nice price run-up.
I knew it would happen.
That's good advice, and even many of the (reasonable) gold bulls on the tube advise limiting exposure to 5-10% of your portfolio. So given that, are the gyrations in price really such a big deal? I mean, if you had 20 mutual funds and 1 of them lost 20% of it's value (from the high), would you lose sleep? It seems like a lot of the gnashing of teeth that goes on here relates, once again, to the emotional nature of investing in gold and silver.
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Just to clarify for all:
SHORTS also average into the positions that they hold long term.
EG:
Short 100 shares at $10.00
Share price rises to $15.00
Short another 100 shares at $15.00
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"...you are playing with silver that may or may not exist. You are also paying interest in a margin account...."
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The silver does exist. The interest is very nominal. (When you SHORT dividend-paying shares, you must also
pay the dividend to the shares' owner. Most ETFs, pay no dividend.)
Maintaining a long term SHORT position is no more labor intensive than a LONG position is.
You wouldn't know if it didn't exist, until it was to late to get out. If you read the prospectus of SLV, you could take all day to explain to me just who is responsible if a default occurs. A fine piece of work, if I do say so myself.
Who was it that collected investor money for precious metals storage for 20 years before someone realized that the precious metals in their metals accounts didn't actually exist. Merrill, or Barclays? I forget which.
I traded SLV successfully for the past year, and I no longer feel comfortable with it. But that's just me.
I knew it would happen.
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The stewards, at the risk of being put into prison, certify delivery
of the metal required to back EACH issued share. The SEC is quite
satisfied with their ability to cause inspections at ANY TIME.
If one share of ANY ETF were to be found faulty, the whole industry
would vanish. It is not worth the risk for the operators to scam.
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For clarity, nobody "gets the silver out." They simply sell their shares.
Was it Merrill, or Barclays? Why wasn't anyone ever charged in that scam?
I knew it would happen.
<< <i>Storm, you need to read the prospectus. You also need to review what Ted Butler has written about the lag between SLV transactions and the actual silver movements. >>
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Really think I haven't read it? (I submitted lots of written testimony in support
of approving the listing.)
Barclays takes bulk deliveries. They are not required to adjust the vault everyday;
no required deliveries have been missed. All the docs are in order, to date.
Yes, SLV is convenient and easy to transact. Slick and easy. And short-selling is a "legitimate" way to provide "liquidity" to markets. Yepper, that's what we were all told. Well, liquidity seems to be THE problem in the financial markets at the moment. That couldn't possibly have anything to do with all these derivatives that can't be backed up by a counterparty, can it?
The time for trust in derivatives is over. The banking system has not earned my trust, and neither have the CFTC or the SEC. I'll take my silver in physical form, thank you very much.
I knew it would happen.
My game won't allow me to long-term these stocks; I'd rather be jumping in and out preserving the profit. BTW: I do still hold some physical, and intend to use the profits (if I keep them, I'll admit) from flipping to purchase more.
Am I off base with the above? I guess I'd say there's no way I'd consider staying long in SLV, but I certainly will play the sucker as long as volatility exists...which may be for some time.
Tomo, the price is volatile enough for sure. Are you up +50% by being long, or short? Either way, you must acknowledge that the risk is high. Everyone cannot win. I made several winning bets on the long side, and I'm out. Storm contends that shorting now is a no brainer.
I say, either way, short term trading is risky in a volatile market and that fundamentals make more sense. Storm says that fundamentals are meaningless because his technical market indicators are a sure thing.
In recent days, fundamentals have been thrown out the window as silver has cratered for no apparent reason. Storm contends that there is no manipulation, and many others would disagree.
Why should anyone care? Good question. In my case, I care enough not to risk my money in a paper market that is subject to underhanded manipulation. Storm cares because he wants people in a paper game that he thinks he can win, and he doesn't want people in physical because physical silver cannot be manipulated.
It's only money, after all - so who should care?
I knew it would happen.
Well, that 50% is now down to 32%...gonna pull the trigger again today. Which underscores your point: It's very difficult to keep ahead of the curves (I know, duh!), but if I had more time, I could've made a decent increase in the profit factor today alone on SLV given the swings it was having before oil took off, then dropped, then took off.
And I didn't mean "who cares" without consideration to maintaining or even increasing one's "wealth." Definitely, it's important to me to increase, but the methods by which I go that aren't as important, so long as they are actually increasing it.
I bailed on my mutual funds last week (through my 401k) and am thankful...at least today. I was down nearly 14% for the year. Now, I feel like I have a little more control. I'll be playing the SLV game, but also buying according to your cost averaging formula, and I hope (plan!) to have more than when I started.
We'll see, I guess..
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TOTALLY False. I strongly recommend that folks have the amount
of physical metals that make them comfortable. They should keep
these as an "insurance policy;" and never trade/sell them until the
end of the world.
Trying to trade physical metals for gain in a volatile market does
not work. The ETFs allow folks to turn their money HUNDREDS
of times; the delivery market does not afford anything like that
opportunity.
ETFS are NOT "derivatives," in the sense that you continue to
misrepresent them to be. ETFs are "depository receipts."
of times
Another good reason to avoid them.
ETFS are NOT "derivatives," in the sense that you continue to
misrepresent them to be.
No, they aren't "tranches" that need to be "marked to market" because nobody knows how to evaluate them. But they are derivatives, and they can be manipulated.
So, that wasn't you, talking about how easy it is to follow the shorts all the way down to $6.00 silver, taking money from the peasants like candy from a baby? Was that someone else?
If it was that easy, everyone would be doing it.
I knew it would happen.
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I don't understand that comment.
My trades are documented here; on the BIG thread, and in others.
I am SHORT both SLV and GLD. I will add to the positions on STRENGTH.
Have not seen any "strength" lately. I hope for some after the sucker
longs decide whether or not to meet the MARGIN CALLS they received
on Friday and Monday; those should be resolved by early next week.
<< <i>The market is too big to be manipulated. The prices are down because recessions loom around the world. People aren't buying jewelry like they had been. All the facts are out. >>
Silver is a relatively small market. Estimated demand is one billion ounces a year. At $14 an ounce that is $14 billion USD. That is similar to the worth of a small to mid-cap stock such as Gap Stores (GPS). Sometimes stocks are pushed or nudged or played, especially for short time periods. I would not be surprised if the same is true of silver. That said, I don't worry about manipulation and would rather be on the same side of the big money instead of against it. As some wag puts it, "every thing is in the price," that includes any potential for manipulation, and all the macro economic news.
It was Merrill. And I'm sure no investigation or punishment was ever meted out. If one of the big bankers today was found doing it, they'd be slapped on the wrist and told not to ever do that again (lol). The SEC could care less and turns a blind eye to metal manipulations. Their bread is buttered by Congress, FED and Treasury. No need to upset the apple cart.
The silver market is extremely manipulated and not large at all. Recall that the Hunts beat the big boys at their own game in 1977-1980 when there was far more silver to be had. If not for basically illegal rule changes, the Hunts would have toppled the paper silver market and bankrupted some big players. Buffet had a similar idea when picked up 120,000,000 ounces of silver but the PTB found a way to weasle him out. It is thought by some that his silver found its way into the silver ETF.
Today, the silver market is controlled by a huge number of short shares held by 4-6 major players who have 70+% of market share. Imagine if 4-6 players held all the shorts in the Dow!
roadrunner