Silver Stackers' Playbook

Yeah, it hurts when it hits close to home. Everyone must learn though. I was lucky enough to start my "investing" when I was very young. I lost my entire lifes savings twice. Lucky for me the first time it was only $1100 and the second time, it was around $2500. Yeah, back then I was too smart for diversification. I knew better . DCA? that was for wimps. Go big or go home, Right!!!!

Yup, losing that money was the best thing that ever happened to me. There was plenty of time left to get it right. I wish the best for you friends son in law. Maybe there is enough time left for him to "figure it out"

Cheers,
Mike

 

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I am totally confused on what anyone could possibly owe him a apology for. Maybe I don't understand the situation totally but at the very least why didn't he roll it over into an IRA. I must have missed something.

 

He listened to investor newsletters stating stocks were going to go to zero soon, and your only way to "protect your family" is to have all of your assets in PM, (preferably silver). He succombed to the newsletter BS.

On the positive side, he is younger, and I hope he is as wise in the future as you were Mike. Luckily he was not 55 when he heeded this reckless advice.

 

He gambled and lost.

 

It is so sad how easily people can be taken in. My guess it will just get worse with people grouping together on the internet to reinforce their individual conspiracy theories.

 

The the OP, we have seen ever since the price dropped below $25 that premiums will rise to negate any further decline. Now is as good a time to buy as we have seen since 2010, even with the high premiums. I would suggest scouting your coin shops but if you can't find any good deals my preference for online retailers is Provident Metals. They don't have eagles in stock, but some great deals on Fiji takus and Libertads. The only way you will find a better deal than right now is if the price stays down where it is long enough for the supply chain to outpace the buying frenzy, and it's anybody's guess how long that will take. As it stands you can expect to wait 2-6 weeks for the supply chain to catch up, and that will only lead to lower premiums if buyers don't step in and gobble that up too. I think it's a longshot to assume silver prices will stay where they are long enough for supply to catch up. By the time that happens price will either be higher, or it will be lower with premiums causing the overall price to be the same as it is now. Silver is the most volatile market in existence afterall.

As for dealers making money on their hedges, this would only be the case if they were naked hedges. The whole point of a hedge is to cancel out your position so you don't make or lose money on the price of your asset, shielding from price instability, with all profits being derived from the buy/sell spread. Anyone making money on hedges isn't hedging a real position.

As for the person who sold their 401K, we're still in the 7th inning of this game. Nothing has been lost unless he is forced to sell. He still has all the metal he purchased. People make their own decisions. Nobody owes him an apology. Anybody whose investment timeframe is 6 months is asking to get taken to the cleaners. Sure his net worth has dropped, but that doesn't mean it wasn't the right decision. Time will tell. What is the point of having high net worth if the assets you are invested in are built on a foundation of sand? What's true today may not be true tomorrow. It's only a loss if he sells. I know people don't like this, but it's the truth. Prices fluctuate. It's all about picking your entry and exit points. Maybe the entry point wasn't ideal, but the exit point will determine whether it was a good move or not. Until then the dice are still rolling.

 

I don't understand. If I have 1000 ounces of silver, and wish to protect the value, I sell it today on the COMEX. If when the contract comes due I no longer own the silver, I close the position and pocket the cash. The cash from that position makes me whole when combined with the sales prices I sold it for. Effectively if I sold at $32, but markets declined to $23, I can sell my silver at $23 and still be whole because I will pocket the difference between $32 and $23 on the contract. Now, if I jack up the prices to my customers because, "I have more than that in it", and sell for $28, I just pocketed and EXTRA PROFIT of $5000. Make it 100,000 ounces, and the dealer will pocket an extra half a million dollars this month.

I use contracts all of the time to protect physical inventories. That is how I thought they worked. Maybe I am doing it wrong.

 

Well yes, if you raise premiums of course you will profit. You are not profiting from the hedge, but it allowed you to have the flexibility to profit from your premiums. The buy/sell spread, as I said.

 

Right. So my point is if they were properly hedged, dealers are making out like bandits at these higher premiums people are paying. If the dealer properly was hedging his inventory, he doesn't NEED to increase his premiums, but of course WILL if people will pay it. I do not blame him a bit. Business is tough, make profits when you can.

However, seeing and knowing how this works, doesn't it affect how you are viewing today's premiums? See how to a properly hedged dealer this is a huge bonus right now?

 

Yes, I really think waiting for premiums to go down is a mistake. My favorite LCS was sold out of 90%, but he says he does get some, and was selling at 18X earlier today. Music to my ears. I will try again next Friday and Saturday.
Plan B would be ASE's at 4.25 over spot from LiberetyCPM. Not bad in this market.

 

I doubt that the ones charging the much higher premiums were hedged. Even dealers can fall prey to the bullionists call. you are correct about proper hedges, but remember to add in the initial selling price you got for the contract. That plus the amount you received at the close of the contract should be close to 30% for those hedged this last week.

Also if silver had gone up, you can hedge the other way and buy an off-setting contract and get your silver back. If you wished, you could also add a margin buy to add cash if it continued up. I am sure some who hoo-hah because it is paper, but you could laugh to the bank. With paper contracts and options you do have an expiration date, so one is less tempted to keep hoping things reverse for 10 years.

 

It's called personal responsibility, no one owes him an apology by any means.

Btw what is the point of contradicting yourself in the same sentence? First you allude to the truth (that we are responsible for ourselves) but then sadly you switch your tone to the blame game that seems to be used so much lately, it's always somebody else's fault. Someone (who?) needs to apologize for someone else's financial decision?.... on what planet that makes sense I do not know...

 

who talked him into buying silver?

 

Personally I think sticking everything in one investment or investment class is foolish no matter how it turns out. I don't bet on the end of the world because who wants to win that bet.

 

If the market deems metals dealers a profitable enterprise then more power to them. If the premiums weren't justified people wouldn't pay them.

 

I agree. I'm not 100% metals but definitely higher than the suggested 20%. Not because of any end of the world scenario, but because it's practical, and will help shield me from the risks that others take. Metals are the only investment I'm actively pursuing currently simply because their fundamentals are the best I've seen, in my particular view.

 

I agree. That's how it works and if someone waits for them to say "sell" they will be very disappointed. A good example is Stephen Leeb, a well known serial newsletter writer who waits for a bull market to be well underway and then say he predicted it all along.

 

I understand, I agree with personal responsibility. Where is the personal responsibility with those selling newsletters scaring people into making a poor financial decision? All of the PM press I see are simply making excuses, stating why "the man" is manipulating them, etc. Not one has admitted MAYBE they were wrong, MAYBE they shouldn't have predicted $40 silver a few months ago.

That is the only "apology" I was referring to, apologizing for using scare monger tactics and being DEAD wrong.

 

If you choose to believe any price someone is willing to pay is therefor "justified", then more power to you I suppose.

What about the member here trying to help a senior citizen who was charge $8k for about 66 ounces of junk silver. Is that "justified" as well? She paid it.

 

Actually, all I would like to see is full disclosure. You can bet your last bottom dollar these bloggers and newsletter writers are not buying silver with their "premium service" money. If they disclosed their portfolio, would folks really be shocked to learn their portfolio's are 65% equities 25% bonds and 10% PM's I know I wouldn't be, but hey they got kids to put through college, so who can blame them.

Mike