I am seriously considering investing in precious metals further to some information which I found on the goldsilver.com website and would really appreciate some valuable feedback and advice from you experienced investors out there. I have few questions on which I would like your thoughts. Is now the best time to invest in silver? Is it true that silver is undervalued compared to gold? and in the current time, is silver a better investment opportunity than gold? and what about copper? Is there any value in considering investing in copper? You input much appreciated. Thanks.
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Well, first of all, all you can get on this topic is opinions. And you know what they say about opinions.
My opinion is that eventually, silver will outperform gold. Essentially, nearly every ounce of gold mined in history is still in circulation or storage. Silver is different in that it is a precious metal like gold, but also a consumable. Only a small percentage of the silver ever mined is still in circulation. The tech sector has consumed massive quantities of it.. and will continue to do so for the foreseeable future. While reclamation efforts are always improving, it will probably never match consumption. The same argument could also be made for platinum & copper. However... copper prices are very dependent on the global economy. In the event of a global depression that results in a drop in demand, or even halt of it, copper prices could plunge. Manufacturing demand for silver and platinum for tech could cease and I don't think it would even come close to offsetting their value as a medium of exchange.
My opinion is worth every penny that you paid for it. What I think isn't important, but what the herd thinks will determine the future.
If you trade silver, you want to watch gold and anything that influences gold prices as the two markets tend to move together. Watch the spread between the gold and silver prices to move to one extreme or the other and expect it to come back to normal, buying silver and selling gold at the high end of the spread, for example.
Be careful when holding silver futures overnight. In the volatile market conditions that have marked silver trading in recent years, the price of silver can make big moves from one day to the next.
At last i see a topic which I actually KNOW something about..
I invest in PM, (not in a big big way, because I'm not by any means wealthy). I have been swing trading physical silver and making a few bucks at it. For example i traded my silver account up 8% in March, then I squeezed myself out of the market, and over the last two weeks watched silver rise almost 10% while i sat in cash, cursing myself for missing the trade. I had been waiting for a correction.
If you really want to study PM's there are many good websites. Start at kitco and read their news section, but understand that they are the biggest PM vendor in the market. I would also download the mp3's off kingworldnews and listen to as many of their audio files as you have time for. You will be enthralled, i'm sure.
Everyone has their own understanding of PM's. I used to buy and sell physical many years ago, as a manufacturer, and that hands-on experience probably makes me very biased toward ownership. I would never own paper gold for example.
If wanting to truly understand gold, you must first understand the history of fiat currency, at least in the last century. Gold is regarded as the yardstick by which the global base currency is measured, and let's not forget that before USD, it was the pound, and before the pound, the guilder briefly, and before that the Spanish doubloon was the world's base currency. One must accept and understand that there only ever is one global base currency, and gold is the measure of its purchasing power. (Gold appears to be measured in USD, but actually its the reverse.)
Then there is the meddling by the banking regime to fully understand; the fact that some huge percentage of the gold that trades back and forth is paper gold, leased gold etc. Banks hate gold. My broker hates gold, its not in his best interest when i buy gold.
As for my opinion on owning PM's? They are a store of wealth. Never buy gold to sell it. Always buy gold to protect your wealth. That way you won't spend it. There is no question in my mind whatsoever that we will see $80 to $120 silver, and $2,500 gold over the next 2 years. In other words, i see USD shrinking by 1/4 or 1/2 of its current value over the next year or two. When Lousie Yamada went on the record last month predicting $140 oil in 2011, I am convinced she was talking about the effects of the crashing dollar. This being true, the next leg of the gold run should be $1850.00. This next leg up in gold will take silver to $50. That's how we bugs see it. Marc Faber was on Bloomberg this week predicting a correction in PM's over the next three months. He is of course guessing. I was guessing along with him, as i watched silver fly right by me this last month.
We are in the middle, (or even earlier) of a bull run in PM that's probably going to last several years, until USD transforms, morphs into, and is eclipsed by the next new world base currency. Historically there has always been a global war surrounding that event.
my 2 grains worth
Last edited by Donald; April 3rd, 2011 at 06:59 PM.
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As a follow up to my post of yesterday, I would really enjoy to hear any other opinions on the direction of the PMs. This is a very hot topic all over cyberspace, and it seems logical that traders would be interested in the direction this market is going, but then again, maybe interest in PMs are mainly for the bugs among us.
I didn't know anything about futures when I invested 50% of my portfolio in silver when it was fewer than nine dollars in '09. I'm always behind the curve and now a speculator.
You are more so, but I would still recommend allocating a percentage of your portfolio to physical silver, in small weight denominations.
The dollar index DXY has already just broken through the lower support trend line of a 3 year symmetrical triangle – where I have calculated the first leg down to be 64 on the DXY or 88 in the event that it brakes upwards. My 30 year head and shoulders chart on the DXY has a target of 104 if it breaks upwards and 35 if it doesn't. I don’t consider foreign bonds as safe of an alternative if this happens - but Canadian bonds would be my choice, then Australian. I am hesitant to go into more detail because I used to write guest posts on zerohedge and now my phone is tapped and e-mails to them intercepted.
I prefer the Canadian Maple Leaf over the American Silver Eagle. Even better IMHO is 90% junk silver - dimes and quarters from 1964 or earlier. Fort Knox gun safes are popular for people who store at home. I chose to pay to have it stored an hour away, which I doubt will defeat the purpose of buying it entirely, but you can guess where I will be if Japan dumps our Bonds.
Tulving has the best prices and shipping for PM's but you have to buy in quantity. APMEX is a good alternative otherwise. If the dollar does crash you may have wished you spent the money on a bike, water purification via reverse osmosis or/and ionizers, in addition to dehydrated food.
If you are interested in reading about the topic “When Money Dies” is a far reaching masterpiece on America’s currency situation written in the 70’s. Let me also recommend (the world’s foremost expert on hyperinflation) Peter Bernholz’s book: “Monetary Regimes and Inflation: History, Economic and Political Relationships”.
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PM's have always been a poor instrument for making (relative to others) money and mostly a vehicle for protecting wealth against inflation.
You can do considerable research yourself, but both Gold and Silver are the next bubble, eventually they will burst and return back to normal levels....and it if history serves, it will happen rather rapidly........it's just another game of musical chairs....when the music stops, someone's going to have a frownie face.
Other than the typical external drivers like bond markets and stocks and returns on other ventures, you should also look at distribution/consolidation and learn about "Silver Thursday" and look at Gold in 1980 as well.
PM's always surge ahead of equities when the masses are fearing inflation....but as soon as confidence in the markets regains, and people begin bailing for greener pastures, the collapse happens quickly in a frenzy....as the more it drops, the more fear it instills and results in a rapid, frantic selloff.
If you look at the lessons we learned during the junk bond crash 4 decades ago, you'll see that PM's are not a long term investment vehicle....
Like I said, if you're swinging or ID trading/scalping, then fine, but banking on Silver/Gold to sustain their current meteoric levels is foolish or at best VERY "risky."