Bulls make money, bears make money, and pigs...

Steve27

go to the slaughterhouse! It's an old saying, and usually made in reference to the stock market, but I find it appropriate for precious metals as well. Recently, I've seen a lot of hype here regarding big rises to come in silver and gold as the dollar collapses. Well I haven't seen anything resembling a collapse in the dollar, and with the problems in the European Union, the dollar continues to be the world's reserve currency. As for the rise in precious metals, it appears to be due to a combination of failing European economies and unrest in the Middle East. So the bottom line is, I don't know if silver/gold are going up or down next week, and neither does anyone else here. However, due to the recent rise, I have been selling silver because I have made a large profit, and you can't get hurt taking profits. As for those of you who are "dollar cost averaging," good luck with that, I remember a 20-year stretch where precious metals (particularly silver) were flat.

OPA

I agree, you'd be foolish, with today's prices, not to take some $ of the table. As the saying goes, "you can't take it with you," and I'm not a paranoid SHTF follower.

Justacommeman

Steve,

You seem like a really nice guy but I truly do not follow your logic

1) I bought Apple at $20. I sold it at $80. It's at $350 now. I got killed by taking a profit. Thanks for the well wishes on the dollar cost averaging or stacking if you will. There is a time and place for trading in and out of positions. There is also a place for conviction and long term trades. The Cramer CNBC mantra of bulls make money, bears make money and pigs get slaughtered has it's place but sounds a little condesending when used to illustrate one's own actions like you did. In this case you selling silver and anyone else that is holding is in the bovine section of the barn. Holding to ones own convictions is often a virtue. I respect your actions, but please respect those of others as well.

2) You keep tossing the troubles in Europe and the Middle East as the reason PM's are up. (it's actually trouble in North Africa that could impact the Middle East). Here's where you really lose me. With all these problems as you stated shouldn't dollar have rallied as the reserve currency during these crisis's? It's actually gone lower! Why is that? Maybe, just maybe this portends the reality that the the dollar is the world reverse currency in name only. Maybe, just maybe the world is turning to precious metals, oils, hard assets, soft commodities etc? The Euro is at $1.375 against the dollar. Why is that?

3) The US has as many if not more problems then the EU. Actually, I will go ar far as saying we are far worse off as a whole.

4) I will agree with you on one thing. No one knows with absolute certainty the direction that silver will take.

5) Congrat's on taking a profit if that makes you happy. More power to you. Good luck with that.

6) Your comment on 20 years of silver being flat ( actually it had a long long down cycle that many experienced) is actually akin to building a case for the bullish side since pm's tend to run in 15-20 year cycles. If so then this silver bull could just be in it's infancy, right? Just possible, right?

I think most discount the intrinsic value pm's offer as insurance and the piece of mind it provides. Sleeping well is a good thing.

an image sometimes paints a better a better picture then words. The world reserve currency during the crisis's you speak of

MJ

Zubie

I agree Steve, I sold 1/2 of my silver stack and all of my Pd to APMEX last Monday. It was so hard to make that call, but, it feels good to be nearly debt free!

edmundfitzgerald

I bought BIDU at 40. I sold it at 50. It's now over 1,000.

I think I'll hold my PM's.

roadrunner

2 yr chart of dollar vs commodities

This chart shows the loss of dollar purchasing power over the past 2 years. The dollar and euro are falling at different rates at different times. So using a tangible standard shows the reality of things. The dollar has lost more than 50% againt a basket of commodities in < 2 yrs. The same chart graphed from 2001 would be even more constructive as we know the dollar index has fallen 35% yet gold has increased 450%. Just looking at currency charts would lead to an erroneous conclusion with respect to real currency valuations.

Have to agree with MJ that getting out of a winner way too early is actually losing. You don't get many chances in life to ride a winner.

Let's see how silver and gold do by June before grading this exercise.

roadrunner

Baley

two years, huh? Why, that period starts nearly exactly at the market bottom of March 9, 2009!

roadrunner

Your welcome to submit the 9 yr chart from 2001.......it doesn't look much different.
Dollar has lost >80% of its value against commodities during that period.

I know, 2 yrs or 9 yrs is really not a "trend." We need to see gold do this for 15-20 yrs before a trend will be generally "accepted" by the masses.
Yes, the dollar (and TBonds) peaked on an insane flight to safety in 2008. People seem to know better these days.

roadrunner

Baley

I know, 2 yrs or 9 yrs is really not a "trend." We need to see gold do this for 15-20 yrs before a trend will be generally "accepted" by the masses.


And once it is accepted by the masses, it will end, right?

roadrunner

<< <i>I know, 2 yrs or 9 yrs is really not a "trend." We need to see gold do this for 15-20 yrs before a trend will be generally "accepted" by the masses.
And once it is accepted by the masses, it will end, right? >>



More than likely. J6P is usually the guy given the bag at the end of any economic cycle and bears the brunt of the loss whether it be stocks, bonds, beanie babies, or tulips. No doubt some, most, or all commodities will fall apart at some point. Though whatever commodities are included in a basket of goods that anchors currencies in the future, will maintain most of their value. I doubt we'd see silver included in such a basket. And people still need to eat, drink, and provide shelter. So it remains to be seen just how much those commodities can blow up. Rather than looking at the tail wagging vigorously (ie commodities), I'd suggest focusing on the dog's head (ie fiat currencies).

roadrunner

jmski52

Mark your calenders. Game on!

mhammerman

I try to add to the stack when I have too much cash and have not sold any PM in a while. I did let go of some numismatic bullion at a local show, the price was just too good to resist. The PM's in the stack are neither a profit driven exercise not a fear of the unknown strategy. The stack is a savings account that has increased in value significantly since I first started stacking in '05 (actually more than doubled in value). The stack is not for paying off the mortgage, it's for buying a nice little 10 acres in a nice little area when I get around to hanging up the spurs and a little set aside to pay for my grand daughters college education. Little girls are horrible, they steal your heart and then take your money.

My first goal was to get debt free other than mortgage and at 4.3% for the house note, it's like free money. Car's paid for, got fair to good income, and it is so nice to not have the CC's hosing me for money or dunning me for God knows what reason. Converting to cash for daily expenses and vacations is certainly a nice lifestyle since I don't have to deal with the banksters or their minions...what a con those guys got going.

I have no reservations about reaching into the stack to satisfy some kind of expense that was unanticipated, I'd do it in a heartbeat...meanwhile, keep stackin'. I can't imagine flippin PM's on a guess or buying ETF's or any of the other games people like to play with metal, I just stack it and spend it when I have to or not. Ain't no pigs getting slaughtered here.

Got CASH?

Baley

More than likely. J6P is usually the guy given the bag at the end of any economic cycle and bears the brunt of the loss whether it be stocks, bonds, beanie babies, or tulips. No doubt some, most, or all commodities will fall apart at some point. Though whatever commodities are included in a basket of goods that anchors currencies in the future, will maintain most of their value. I doubt we'd see silver included in such a basket. And people still need to eat, drink, and provide shelter. So it remains to be seen just how much those commodities can blow up. Rather than looking at the tail wagging vigorously (ie commodities), I'd suggest focusing on the dog's head (ie fiat currencies).

So, if miners and farmers are seeing higher prices for their products, what do they do? Increase mining operations, reopen formerly unprofitable mines because they're now profitable, plant more acres in the profitable crops, develop new acres into farmland...

and THEN what happens when A: the supply increases and B: the demand decreases (because the aggregate user of raw materials has built their stockpiles large enough to withstand the cycle of high prices and stops buying?

jmski52

and THEN what happens when A: the supply increases and B: the demand decreases (because the aggregate user of raw materials has built their stockpiles large enough to withstand the cycle of high prices and stops buying?

Haven't you just described what is happening to the dollar? It's sure enough not what's happening with precious metals.

roadrunner

So, if miners and farmers are seeing higher prices for their products, what do they do? Increase mining operations, reopen formerly unprofitable mines because they're now profitable, plant more acres in the profitable crops, develop new acres into farmland...

I can't speak to the farmers issue since that market is so heavily subsidized and "managed" by outside forces. Just look at corn and dairy products as one example.

But with the miners, the price of gold has been rising for 8 yrs now, yet the miners are producing no more gold than they did in 2001. How's that? I don't know, it must be a tough industry with risks and costs that keep rising. The senior miners are just barely replacing mined reserves each year. And if they are increasing reserves it's generally by buying out juniors and explorers. It's basically robbing Peter to pay Paul. Gold miners are processing 2-3X the ore they were 8 yrs ago, just to get the same number of ounces. Their operating costs have been generally increasing year to year. A number of new juniors have gone the way of exploring old mining jurisdictions. But so far, it hasn't made a dent in the annual production numbers as there are very few mines yet producing in those areas. Some of the newest and largest gold strikes such as held by non-producing juniors Novagold and Northern Dynasty are probably 3-5 yrs or more away from production, assuming they don't run into environmentalists or other problems along the way. In the last gold bull market gold miners continued to rise into the 1980's, years after the gold price had peaked. And that can make sense if one looks at the gold price after eliminating the period from fall 1979 through 1980. New mines planned back in the late 1970's finally came into service into the mid-80's which caused production to peak around 1985-1986. There's no switch miners can throw to quickly increase mining operations. I would say that central banks, funds, and investors are trying to stockpile gold for the day when the fiat crunch really occurs. World gold supply is increasing at 1.5-2% per year...hardly enough to keep up with the fiat expansion over the past 20 yrs. World wide M3 money supply now estimated at around $75 TRILL.

charts of world wide M0, M2, M3. - from dollardaze.com

Note that US is getting a lot of help from other nations in the race to devalue. Gold reacts to the world's money situation. World M3 has doubled in the past 7 years - that's about a 10% per year increase...far from the meager increases in gold supply. Over the past 40 yrs it looks like M3 has doubled about every 7-8 yrs with no end in sight.

roadrunner

Steve27

"it's actually trouble in North Africa that could impact the Middle East"

Last time I checked, North Africa was part of the Middle East.

yellowkid

MJ's Apple story reminds me of when I was advised to buy Dell stock, I think it was '88 or '89. Anyhow, I thought it was the old comic book company and thought my advisor had to be kidding.
It depends on what purpose your PM's serve. A way to get rich or a hedge? Maybe just an investment? My take is that silver will see a big correction long before it sees $50, but what do I know. I see nothing wrong with taking a little off the table if you have had a good run, but not just to put a relatively small amount in your pocket.

Justacommeman

<< <i>"it's actually trouble in North Africa that could impact the Middle East"

Last time I checked, North Africa was part of the Middle East. >>



I've spent a lot of time in North Africa and The Middle East. Never have I heard of this phenomenon. MJ

The World Atlas takes umbrage with your assertion as well

Roster of Middle Eastern countries

Afghanistan

Bahrain

Iran

Iraq

Israel

Jordan

Kuwait

Kyrgyzstan

Lebanon

Oman

Pakistan

Qatar

Saudi Arabia

Syria

Tajikistan

Turkey

Turkmenistan

U.A.E.

Uz

roadrunner

MJ,

I thought Uz was a brand of potato chip? You learn smoething new every day.

Ok, now I get it....Uzbekistan. That's where the potato chip factory is.

roadrunner

Stew

It has already Begun



Direct exchange setup between Russia and China side stepping US Dollar

Edited to Add:

China, Russia drop dollar as trade currency

Oil producers to oust dollar?

Yuan Trading Against Russian Ruble Said to Start Within Weeks in Shanghai

Steve27

"The Middle East is a region that encompasses Western Asia and North Africa. It is often used as a synonym for Near East, in opposition to Far East. The corresponding adjective is Middle-Eastern and the derived noun is Middle-Easterner."

Justacommeman

Let me guess. Wikipedia, The NY Post or The NY Daily news?

edited to add --Regardless, I'm comfortable with the World Atlas as my source plus my time in those regions.

MJ

mikeyg

To get back on topic....its as simple as this:buy if you are comfortable with that.Sell if you have made a few dollars and want to lock in profits.No one can say if there will be a correction,or if PMs will soar above current levels.
As for me,I went from one gold coin to a dozen and from a few peace dollars to much more silver than I had ever imagined.Adding to it every day.
The big question is can you sleep at night even if there was a big correction?I know I can.

Tallpaul000

Pretty sure there will be a dip in PMs when the FED stops QE2 this june and raise interest rates, but I will definitely be BTFD when that happens. Im a long term holder of circulated silver dollars, hoping they will take the edge off of in my retirement years.

percyb

Pigs make the most money! Stick to your convictions and load up. That's how people get rich. Diversification is for people who don't know what they're doing...

fastrudy

MJ & roadrunner, I respect you guys for your astute predictions and business sense. But this statement

I got killed by taking a profit

is just wrong.