Silver and Gold metals?

[forexpreneur]

Originally Posted by neilward2

Wow this thread is complex!

So let me ask a couple of simple questions to bring it back down slightly...

Firstly, I too have also been looking into gold and silver investment.

Questions:

1. Is now a good time for me to invest in Gold or Silver? Or has the boom already passed?

2. Does anyone have a legitimate chart/tracker of the price of gold and silver over the past few years or longer?

3. Would you recommend using bank/credit card money to invest in metals? I mean would the return be good enough to cover say a 10% interest rate per annum? If so, I can get a large credit card due to my business. But I don't want to take any BIG risks, small risks are fine however.

Thanks! : )

First, I want to make it very clear, I am not a financial advisor and do not even suggest I am one. These are my opinions only, although they are very educated opinions.

I personally do not believe the absolute top has been hit on gold. Silver basically follows gold but man she has been very moody and eratic compared to the other precious metals (a very large part of that is due to large evidence of possible market manipulation from Chase bank).

I do believe that there is a good chance a temporary top has been hit for gold, however there are a few things that can happen which will blow past the top. Thursday was a very important day which indicated that it has gone too high too fast. The reason why I say that gold may have hit a temporary top is because there was near panic in the stock markets yet gold still fell quite a bit which is quite opposite of what usually happens.

The reason why I have very serious doubts that gold has hit an absolute top is due to the REAL global economy. Not the BS fluff that the media and Governments are feeding people, but reality.

If US unemployment was calculated today the same way it was during the Great Depression we would not be at the near 10% the US Government is telling us. We would be right around 30%! Just to give you an idea, the absolute top unemployment rate during the Great Depression was 25%. The reason why it doesn't appear so bad is due to the fact that today we have unemployment insurance; food stamps; etc which did not exist during the Great Depression.

However, the biggest reason why I do not believe Gold has hit an absolute top is due to the fact that there is more debt, and leveraged "investments" than there is money in the entire world! Litterally, just derivatives alone account for at least a couple of hundred times more than the entire global GDP annually. This is why the "Great Recession" is far from being over.

We are heading in to round 2 which will be far worse than the collapse of the Global economy in 2008 after the fall of Lehman. It's all one big house of cards, far worse than the housing crisis and those in power are aware of it.

I wish I could give a far simpler answer for you, but it isn't simple. The global economy is incredibly complicated these days and the old rules of investing and trading don't always apply today. The essence does, but timing is far more complicated as Warren Buffet has found out.

As far as charts for gold charts visit Gold Price History that is a good resource.

P.S. Forgive me for not bringing the thread back down a little. The truth is that even Anthony Robbins has been warning people the last year that things are extremely likely to get far worse than 2008. He works with a couple of the best traders in the World and they have been telling him about some of these things too. Like he says, it is great to be positive but not at the cost of being unprepaired and not seeing potential danger.

[elucidate]

Originally Posted by forexpreneur

First, I want to make it very clear, I am not a financial advisor and do not even suggest I am one. These are my opinions only, although they are very educated opinions.

I personally do not believe the absolute top has been hit on gold. Silver basically follows gold but man she has been very moody and eratic compared to the other precious metals (a very large part of that is due to large evidence of possible market manipulation from Chase bank).

I do believe that there is a good chance a temporary top has been hit for gold, however there are a few things that can happen which will blow past the top. Thursday was a very important day which indicated that it has gone too high too fast. The reason why I say that gold may have hit a temporary top is because there was near panic in the stock markets yet gold still fell quite a bit which is quite opposite of what usually happens.

The reason why I have very serious doubts that gold has hit an absolute top is due to the REAL global economy. Not the BS fluff that the media and Governments are feeding people, but reality.

If US unemployment was calculated today the same way it was during the Great Depression we would not be at the near 10% the US Government is telling us. We would be right around 30%! Just to give you an idea, the absolute top unemployment rate during the Great Depression was 25%. The reason why it doesn't appear so bad is due to the fact that today we have unemployment insurance; food stamps; etc which did not exist during the Great Depression.

However, the biggest reason why I do not believe Gold has hit an absolute top is due to the fact that there is more debt, and leveraged "investments" than there is money in the entire world! Litterally, just derivatives alone account for at least a couple of hundred times more than the entire global GDP annually. This is why the "Great Recession" is far from being over.

We are heading in to round 2 which will be far worse than the collapse of the Global economy in 2008 after the fall of Lehman. It's all one big house of cards, far worse than the housing crisis and those in power are aware of it.

I wish I could give a far simpler answer for you, but it isn't simple. The global economy is incredibly complicated these days and the old rules of investing and trading don't always apply today. The essence does, but timing is far more complicated as Warren Buffet has found out.

As far as charts for gold charts visit Gold Price History that is a good resource.

P.S. Forgive me for not bringing the thread back down a little. The truth is that even Anthony Robbins has been warning people the last year that things are extremely likely to get far worse than 2008. He works with a couple of the best traders in the World and they have been telling him about some of these things too. Like he says, it is great to be positive but not at the cost of being unprepaired and not seeing potential danger.

Given what you have said here, what is your opinion about what was said in my OP?

Are the 7 steps that make up this 'cycle' that mike Dillard pointed out on his webinar an actual reality, and if so, is the 'wealth transfer' step the best time to buy metals?

Is it like snerpgoodword said, and just inaccurate, or is there something to it, in your opinion?

[SnerpGoodWord]

Originally Posted by neilward2

Wow this thread is complex!

So let me ask a couple of simple questions to bring it back down slightly...

Firstly, I too have also been looking into gold and silver investment.

Questions:

1. Is now a good time for me to invest in Gold or Silver? Or has the boom already passed?

2. Does anyone have a legitimate chart/tracker of the price of gold and silver over the past few years or longer?

3. Would you recommend using bank/credit card money to invest in metals? I mean would the return be good enough to cover say a 10% interest rate per annum? If so, I can get a large credit card due to my business. But I don't want to take any BIG risks, small risks are fine however.

Thanks! : )

1. At least by my terminology, there is no such thing as investing in a commodity. Their economic use is to consume them (ie burn oil, make electronics out of gold etc.) rather than to provide yield. If you buy gold and hold it, it just sits there and costs you a storage fee. The only way to profit is for price to move up and then sell. Since you're tied to price, that's speculation.

As to whether it's a good time to speculate, that question hinges on time horizon, your level of skill at speculation, the level of leverage you desire to use (if any), and your willingness to watch the position carefully. For most people, I would say no.


2.
Commodity Futures Charts & Futures Quotes Menu

3. God no. Since you're asking this question, the answer to 1. is also no.

If the subject interests you and you want to learn, I would suggest running your would-be gold or silver speculation on paper to gain experience. You can use the GLD or SLV tickers to get a price that more or less follows the spot price from any financial website, or get delayed quotes for the futures at CME Group - Futures & Options Trading for Risk Management

[Peterw]

Originally Posted by SnerpGoodWord

1. At least by my terminology, there is no such thing as investing in a commodity. Their economic use is to consume them (ie burn oil, make electronics out of gold etc.) rather than to provide yield. If you buy gold and hold it, it just sits there and costs you a storage fee. The only way to profit is for price to move up and then sell. Since you're tied to price, that's speculation.

As to whether it's a good time to speculate, that question hinges on time horizon, your level of skill at speculation, the level of leverage you desire to use (if any), and your willingness to watch the position carefully. For most people, I would say no.

2.
Commodity Futures Charts & Futures Quotes Menu

3. God no. Since you're asking this question, the answer to 1. is also no.

Or short it when it goes down

[Peterw]

I'm not familiar with the cycle posted in the OP but I like this one here and think it is relevant to (spot) gold right now:



Kind of makes me think a bit of Soros' theory of reflexivity.

I just bought this book here so I'll report back if it's any good:

The Trader's Great Gold Rush: Must-Have Methods for Trading and Investing in the Gold Market Wiley Trading: Amazon.co.uk: James DiGeorgia: Books

FWIW I think gold and silver are in a long term bull market but right now there's some wierd correction going on so I'm short both until they bounce where I'll take profit, about turn and build up some longer term positions.

The cycle described in the OP sounds very long term.

[SnerpGoodWord]

Originally Posted by Peterw

Or short it when it goes down

Or sell volatility when it moves sideways. Or buy volatility when it moves violently either direction. That about covers all the bases.

To be technically accurate, I should have said the only way to profit from a conventional long gold position...

That said, I don't think any of these strategies match neilward's knowledge and situation.

[SnerpGoodWord]

Originally Posted by Peterw

The Trader's Great Gold Rush: Must-Have Methods for Trading and Investing in the Gold Market Wiley Trading: Amazon.co.uk: James DiGeorgia: Books

Have you read the book in question? If so, what's his take on the mining and melt situation? My read is that mining + melt greatly exceeds non-speculative demand (basically, jewelry + industrial). Does he argue otherwise? Because the Amazon blurb sort of implies he does.

[Peterw]

Originally Posted by neilward2

3. Would you recommend using bank/credit card money to invest in metals? I mean would the return be good enough to cover say a 10% interest rate per annum? If so, I can get a large credit card due to my business. But I don't want to take any BIG risks, small risks are fine however.

Thanks! : )

I would never do this in anything - not even real estate

[Peterw]

Originally Posted by SnerpGoodWord

Or sell volatility when it moves sideways. Or buy volatility when it moves violently either direction. That about covers all the bases.

To be technically accurate, I should have said the only way to profit from a conventional long gold position...
That said, I don't think any of these strategies match neilward's knowledge and situation.

I know what you meant I hope you've joined in and had some of the 'free money' these last 2 days

Originally Posted by SnerpGoodWord

Have you read the book in question? If so, what's his take on the mining and melt situation? My read is that mining + melt greatly exceeds non-speculative demand (basically, jewelry + industrial). Does he argue otherwise? Because the Amazon blurb sort of implies he does.

Still hasn't arrived! Ordered it about 2 weeks ago now for standard delivery and still waiting

[SnerpGoodWord]

Originally Posted by Peterw

I know what you meant I hope you've joined in and had some of the 'free money' these last 2 days

The last two days have been profitable in every market for me except for my long-term S&P position, which is long. Net a good 2 days.

Still hasn't arrived! Ordered it about 2 weeks ago now for standard delivery and still waiting

If you wouldn't mind reviewing what's in the supply/demand and mining discussion when it arrives, I'd appreciate it.

[Peterw]

Originally Posted by SnerpGoodWord

The last two days have been profitable in every market for me except for my long-term S&P position, which is long. Net a good 2 days.

If you wouldn't mind reviewing what's in the supply/demand and mining discussion when it arrives, I'd appreciate it.

Sorry to hear that, you'll get it back though of that I am sure

I'll write up a review of those sections just as soon as the flipping thing arrives and I get a chance to read it....

[SnerpGoodWord]

Originally Posted by Peterw

Sorry to hear that, you'll get it back though of that I am sure

I guess I wasn't clear. I made money in CL, GC, ES, TF and three stock/SPY spreads short term. I lost money in SPY/ES long term. Net, I made money.

[Peterw]

Originally Posted by SnerpGoodWord

I guess I wasn't clear. I made money in CL, GC, ES, TF and three stock/SPY spreads short term. I lost money in SPY/ES long term. Net, I made money.

hehe oops - I thought "Net a good 2 days" was a typo

[Peterw]

Looking to close my gold short at 1650 is it gets there.. Nice ride down from 1785 courtesy of Ben Bernanke

[SnerpGoodWord]

Originally Posted by Peterw

Looking to close my gold short at 1650 is it gets there.. Nice ride down from 1785 courtesy of Ben Bernanke

Not that it's much of a prediction, but I'm pretty sure you'll get filled on that one.

The gold response to Twist II has been interesting though. I'd think all the doom & gloom and risk-off and fed intervention would play into the goldbug mentality. Almost makes me wonder if the very last goldbug levered up and bought his GC a couple of weeks ago and there are none left.

[neilward2]

Ok thanks everyone. A friend of mine was saying I should invest in gold and that it's really easy but I'm going to go on my instinct here and stick to property investment for the time being, at least I'm well read in that. I actually don't know anything about gold investment etc.

I'm surprised how complicated this all is!

[SnerpGoodWord]

Originally Posted by SnerpGoodWord

Not that it's much of a prediction, but I'm pretty sure you'll get filled on that one.

And my ability to predict the obvious strikes again

[lycan]

Originally Posted by forexpreneur

Do not kid yourself. Successful trading is incredibly difficult...

That depends entirely on your definition of successful. An average of 20% a year from trading is not "incredibly difficult". It requires skill, detachment and attention but it is not "incredibly difficult". In fact, it is easier than running most businesses with a similar yield on capital. Most traders fail because they take excessive risk with the intention of making much more than 20% a year.

[lycan]

Originally Posted by neilward2

3. Would you recommend using bank/credit card money to invest in metals? I mean would the return be good enough to cover say a 10% interest rate per annum? If so, I can get a large credit card due to my business. But I don't want to take any BIG risks, small risks are fine however.

Risk has to be managed. If I had access to 10%/year credit I would definitely buy gold, but not with a standard buy and hold strategy. You simply have no way of knowing for sure what the major players (mainly the central banks) are going to do, so you cannot bet blindly against a currency (which is what borrowing dollars to buy gold amounts to).

[SnerpGoodWord]

Originally Posted by lycan

That depends entirely on your definition of successful. An average of 20% a year from trading is not "incredibly difficult". It requires skill, detachment and attention but it is not "incredibly difficult". In fact, it is easier than running most businesses with a similar yield on capital.

A return on capital > 20% for an extended period is very rare in any business, trading or no. If you look for traders who have accomplished that over a greater than 10 year period on any sort of size, the list is very short. Edward Thorp and Peter Lynch come to mind. John Merriweather during his Solomon Brothers era. James Simons. George Soros. Ed Seykota. Maybe John Paulson. There's probably a few others, but it's a short list.

[lycan]

Originally Posted by SnerpGoodWord

A return on capital > 20% for an extended period is very rare in any business, trading or no. If you look for traders who have accomplished that over a greater than 10 year period on any sort of size, the list is very short. Edward Thorp and Peter Lynch come to mind. John Merriweather during his Solomon Brothers era. James Simons. George Soros. Ed Seykota. Maybe John Paulson. There's probably a few others, but it's a short list.

So your successful trading amounts to an averaged return below 20% a year?

[SnerpGoodWord]

Originally Posted by lycan

So your successful trading amounts to an averaged return below 20% a year?

When I said personal information, I meant it.

[SnerpGoodWord]

Interesting fact: of the 4607 stocks in Google stock screener's universe, 107 of them (2.3%) have an average return on assets (which is what Google has a screen for) of > 20%.

[lycan]

Originally Posted by SnerpGoodWord

Interesting fact: of the 4607 stocks in Google stock screener's universe, 107 of them (2.3%) have an average return on assets (which is what Google has a screen for) of > 20%.

Why are you so defensive? Return on assets is irrelevant within this context. Return on equity is what you look for. You look at return on assets only for the sake of understanding more fully the prospects for return on equity. Most well managed companies take full advantage of leverage.

[SnerpGoodWord]

Originally Posted by lycan

Why are you so defensive? Return on assets is irrelevant within this context. Return on equity is what you look for. You look at return on assets only for the sake of understanding more fully the prospects for return on equity. Most well managed companies take full advantage of leverage.

You've got to be kidding me. Return on assets/capital is a measure of how good a given operation is. It, among other things, is the metric used to measure trading success. Return on equity is a measure first and foremost of the financing structure of a firm and is irrelevant to this sort of discussion.

I mean this in the nicest possible way, but I've never seen so many painfully incorrect financial ideas come out of one person in the course of a handful of posts. Most people would just admit what they don't know or get quiet. You seem compelled to air it all out there

[elucidate]

Originally Posted by neilward2

Ok thanks everyone. A friend of mine was saying I should invest in gold and that it's really easy but I'm going to go on my instinct here and stick to property investment for the time being, at least I'm well read in that. I actually don't know anything about gold investment etc.

I'm surprised how complicated this all is!

Same.

[lycan]

Originally Posted by SnerpGoodWord

I mean this in the nicest possible way, but I've never seen so many painfully incorrect financial ideas come out of one person in the course of a handful of posts. Most people would just admit what they don't know or get quiet. You seem compelled to air it all out there

Yea, okay, I've had enough of this. Think whatever you want to, I don't care.

[forexpreneur]

Originally Posted by neilward2

Ok thanks everyone. A friend of mine was saying I should invest in gold and that it's really easy but I'm going to go on my instinct here and stick to property investment for the time being, at least I'm well read in that. I actually don't know anything about gold investment etc.

I'm surprised how complicated this all is!

My alarms go off big time whenever I hear, "It's easy"! But that's just how I'm wired.

Trading gold or any other commodity is far from easy. Today is another great example. Gold was down over 6% today at certain points. That's in 1 day! When it gets volatile it can whipsaw like oil and currencies. If a person doesn't have experience dealing with major volatility it can cause immense emotional pain, and can really damage the trading/investing account.

[forexpreneur]

Originally Posted by lycan

That depends entirely on your definition of successful. An average of 20% a year from trading is not "incredibly difficult". It requires skill, detachment and attention but it is not "incredibly difficult". In fact, it is easier than running most businesses with a similar yield on capital. Most traders fail because they take excessive risk with the intention of making much more than 20% a year.

Agreed that the definition of "successful" is relative, but then again so is "not difficult."

I feel most traders fail because they can not handle their emotions while trading or investing. Personally most of my wealth is derived from currency trading, not so much from any investing. That takes a totally different personality and really requires a person to be able to handle their emotions during their trading sessions which lately have been quite volatile.

Personally I feel detachment is a myth but that is my opinion. I have known many traders over the years and I have learned that the ones that appear the most likely to make it, according to common wisdom, don't and the one's that seem to be overly emotional do tend to make it unless they are wired to pull a Charlie Sheen.

I agree with you that too many push it too hard and over reach. I dealt with that in the early days of my trading career. As far as 20% being a fair number, well it really depends on the trading/investing vehicle. That can be a very realistic goal with currency trading (still, around 95% blow out their accounts in the first 90 days) but a really big stretch with T-Bills.

As far as businesses, I have many friends with businesses and I have invested in a few, I'll tell you, 20% net profits are nearly as common as a virgin unicorn. Not saying unicorns are sluts or anything.

[elucidate]

Originally Posted by forexpreneur

20% net profits are nearly as common as a virgin unicorn. Not saying unicorns are sluts or anything.

Ha...wtf?