Next step silver - over $20.00

Well said and I gotta agree, I feel the same way.......

 

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I agree...although I succumbed to selling about $3K worth of silver, buying two AGEs.and taking some cash off of the table...knowing that Silver is performing better than gold (as a %). It allowed me to dump a bunch of junk Peace Dollars and loose Mercs, and Barbers.

I still have my Morgans and bullion. My plan is to not to try and time the market, but keep accumulating gold or additional pure silver rounds/bars....up to xx% of net worth...which I am still trying to determine. Probably up to about 20% from a target of 10%

 

10% sounds about right. You could really get hurt with 20% if you end up on the wrong side of the trade..

 

Yeah, but is 10% enough to act as any kind of buffer if 90% goes down the other way?

 

How much did you get for the mercs and peace dollars? I love both those, and might buy a few more. I'm not much of a trader, more of an accumulator. I've usually bought after a "correction". If gold corrects back under $1000, thats the time to buy. If it keeps correcting to $950, thats the time to buy more. We all know it can't go to zero!

 

They were all common date, well circulated coins. I called the 3 dealers in my area and two were paying 11x and one 10.5x and all were within $5 of each other for the AGEs, so I went with the 11x in trade even though the intrinsic value was 13.5x at the time. I realize they gotta make a profit (on both trades). The dealer called his supplier to get the current spread on bags to confirm. What I'd like to be able to do is cut out the middle man in larger buy/sells but I am not sure who most of the deal with - Kitco?

The dealer did share that the spread widens considerably during rapid runups or volatility which would imply that a better selling oppty would be after a silver had leveled out for a few months.

 

Depends to some extent on what the other 90% of your investments are.

In a well diversified portfolio, the odds of this occurring are so slight that I don't think the risk/reward probabilities favor putting 20% into precious metals.

Of course, that is only my opinion.

My neighbor, the gold dealer is convinced everything is going to collapse and the dollar will go to zero. As a result, he has a lot more than 20% wrapped up in gold because he is waiting for the economic world as we know it to end. He is not a happy man.

Investors often make decisions based on what it takes to make them feel psychologically comfortable. If it takes 20% to do that, so be it.

 

Deleted Duplicate Post

 

I am not convinced that 20% is the number. I don't think economic doom is around the corner, so an approach of slowly adjusting my gold holdings will allow me to adjust accordingly. Right now it's probably only 4% and no way I am going to go out and make a single large purchase - I am not that convinced of $1500 gold

 

I can see gold going to $1500, I just think that if it does, it will take a lot longer than some folks think

BTW, how do I delete the duplicate post?

 

To delete the duplicate post, you can EDIT it and there is a DELETE option there. Often, many of these boards have a time limit so that you can't edit/delete after say 10 minutes. That way you can correct a typo, but not go back and 're-write history'

 

I hope you're right, but alas, I'm convinced we'll see $1500 gold by the end of 2010. The "economy" isn't recovering. The so called recovery is a lie. They add all the spending, personal, business, and government, and come up with a number. Then they spend billions on tarp and bailout, and now the number is bigger, but its a shell game. The money is just created and doesn't represent anything being produced. Do we all agree we can't keep having tarp and bank bailouts every year? To have an economy you have to have things getting produced, and we show no sign of that in the foreseeable future. That means gold continues its climb, at maybe 25% / year for at least a coupple of years. That puts us at $1800, and then we're staring $2,000 right in the face. When it hits $2,000, it will mean that 99% of our wealth has been stolen from us since FDR.

 

You may be right. Clearly the economy remains weak which means that the Feds will want to keep the dollar weak. Now will it get weaker than it already is if our economy still is in a jobless recovery...not sure, but thats why I am buying as well

 

Armchair economists are cute when they're young.

 

I wish I were young

 

In the late 1990's I was making good money and building my 401k. Just because I go against the crowd, I put 10% of my money in gold and the rest in mutual funds. Today that 10% is half (gold went up, mutual funds went down). I hear economists, financial planners and the like saying I should sell some of my gold and put it into mutual funds.

I believe the field of economics is "junk science", its invalid just like astrology. Its largely because economists talk about things in terms of dollars. If I put a new roof on my house, and my neighbor water-proofs his basement, there has been no economic activity. But, if my neighbor puts a new roof on my house and I water-proof his basement for him, we've traded work, which is economic activity. However, this economic activity is illegal, because neither one of us is going to claim that we had income, we're not licensed to do the work, we could sue each other.

The collapse of the dollar isn't a "black swan" event, because we can see it coming, we know its going to happen. Its happened in other countries in the past. The next terrorist attack on US soil won't be a black swam event. What will that do to the price of gold?

It somewhat amazes me to see everyone, economists as well, getting giddy about the stock market. In good economic times, like the 1980's and 1990's, stocks went up, and people sold their gold to buy stocks, hence gold went down. Today stocks are going up and gold is going with it. Well, if people aren't selling their gold to buy stocks, where's the money coming from? Its being printed, created from thin air.

Here are some possible black swan events:
1) Our government (you know who I mean) suddenly decides that our march toward socialism is a bad idea, they all become Reagan conservatives, and our economy recovers. NOT BLOODY LIKELY.
2) We continue our march toward socialism, and actually become a socialist utopia. For the first time in history, socialism fulfills its promise and brings prosperity to all. NOT BLOODY LIKELY.
3) The voters see the light and elect Reagan conservatives who bring back prosperity. This happens in spite of the fact that even today the great depression is blamed on Hoover, and FDR is blameless. NOT BLOODY LIKELY.

I can't buy any more gold. I had a hard time buying a gold buffalo for $650 2 years ago, thats twice what I paid for my other gold. So I can't pay $1000 for gold now. I'm just glad I got some when I did.

 

There's a lot of talk about dollar purchasing power and how it is declining. The following is just my own "backyard" observations.

I've been to Europe the past two summers (Spain, France, Belgium & Holland). It is my observation that if you spend a euro in these countries to buy food, clothing or fuel, you get less than you would if you spent a dollar at home to buy any of these categories. We are of course disregarding exchange rates in this discussion.

Real estate relative to the U.S. is also very expensive. A lot of dwellings are small, old and lack the conveniences we take for granted in the U.S.

Why is this? Part of it has to do with the fact that taxes are higher and part of each euro spent is being ear-marked for various government social services (health, social security, unemployment, etc). Also there are more restrictions regarding retail trade that would promote price competition.

I suppose my point is, that although the purchasing power of the dollar does not look good when converted into Euros and spent there, it actually, in my opinion has superior purchasing power when spent in the United States.

 

How much less spending power does the euro have in europe compared to the dollar here? Just a ballpark guess, half as much? a third? A dollar of course is 2/3 of a euro, but I believe the spending power of the dollar is too high, which is why it will go lower. People wonder how high prices can get, just look at europe.

The only defense I hear for the dollar is that it isn't all that bad compared to the other fiat currencies in the world. That's like saying your child is the best behaved child in the reform school. All fiat currencies are the same, they're a vehicle designed to steal peoples wealth. When you steal too much of the people's wealth they stop producing wealth, then you can't steal any more.

I'm a gold bug, I measure everything in terms of gold. Gold will be $2000 by the end of 2010.

 

Based only on my limited experience, depending on the sector (food, energy, etc) the euro averaged about 2/3 to 3/4 of the purchasing power in Europe versus the dollar in America. In a few cases (wine), the purchasing power is just about identical. I'll drink to that!

As for fiat currencies and stealing, my only comment is that currently the stealing is really the result of incompetence, in this case the inability of the U.S. Government to wisely spend taxpayer's dollars.

I don't think gold will be at $2000 by the end of 2010. This would imply either or both of the following:

A big increase in the inflation rate (not in the cards due to sluggish global economy).

An accelerated decline in the U.S. dollar. Not likely due to efforts by Asian countries, Brazil and Europe to keep their currencies from appreciating rapidly.
This can be done by currency intervention as practiced by Japan for years.
Recently, Brazil has been buying dollars and selling reals to impede the rise of
the real. Also, the G20 will continue to communicate and act to prevent a runaway decline in the dollar which would be detrimental to the dollar holdings
of many countries outside of the U.S.

I think the dollar will erode slowly. I could see at best $1500 gold by end of 2010, but more likely less if the global economy gains momentum and uncertainty declines.

One of the more interesting articles I read about goldbugs is that they like gold whether or not the market likes it. This might imply an emotional attachment to an investment which could prove costly.

I'm not sure what to say to your quote "I measure everything in terms of gold." How is that possible?

 

Yes, I like gold, "whether or not the market likes it...". You see, I measure everything it terms of gold. In my worldview, there is no market for gold. There's a market for dollars. My emotional attachment to gold is based on 6,000 years of recorded history. When one says "the market likes gold", what that means is the market doesn't like dollars. If the market decides to start liking dollars, I'm happy, because I have some dollars. In my view, my gold hasn't changed. So, if the market decides to start liking dollars, should I buy some dollars with my gold (i.e., "sell" my gold)? I consider that speculating. I believe non-gold bugs have an emotional attachment to dollars, which means they believe our government, our banks, will act in a responsible way to assure continued faith in the dollar. I believe that is irrational.

One of the early examples of using fiat currencies to steal from the people was Henry VIII. He started adding copper to the silver coins he issued. After some time, the image of his nose on the coins became copper colored, earning Hank the nickname "old copper nose". Here's a good article that summarizes it:
http://history.wisc.edu/sommerville/123/123 232 Henry & edward.htm
This caused inflation, and eventually the debased coins were withdrawn from circulation. The people knew they were being robbed. Today its done more subtly, but still, every dollar that gets "monetized" robs buying power from everyone who has dollars.

Thanks for that good input!

Just to make a concrete example, lets suppose a half gallon of milk costs $1 in the US. Then a half gallon of milk in europe would cost 1.5 euros. This means if you take dollars to europe, exchange them for euros, and buy a half gallon of milk, it will cost over 2 dollars. By the same token, a european could come here, trade euros for dollars, and double the spending power. This is an imbalance that is correcting itself. In othe words, it takes twice as much gold to buy a half gallon of milk in europe than it does here. Our dollars are still about twice as valuable as they should be, which is why the price of gold will double, over $2,000.

With fiat currencies, you're just trusting the issuing government to "play fair". If a country finds itself deeply in debt, they could just devalue thier currency, and presto, debt cut. Of course the creditor nations could just devalue their own currency in retalliation and self-defense. That's not good for anyone, so they get together and make agreements. When things still go wrong, they get together and make new agreements. Whatever agreements they come to, they have to involve the dollar being worth less compared to other currencies. The US is taking more from other countries than we're giving back, and have been for some time.

We're in a dollar bubble, and its just starting to burst. The dollar is over-valued. When bubbles burst, the price of the object of the bubble tumbles, to about a third its bubble high. Then it slowly climbs back, as the bubble bursting takes it too low. If you're a "non-gold bug", you see a gold bubble, which will lose half its value when it bursts, then slowly come. But, if you're a gold bug, you see a dollar bubble, which will burst and slowly come back. In terms of the "price" of gold, this means gold will continue to rise rapidly, then dip slightly and slowly come back. But, if more dollars are printed, in a futile effort to stop the inevitible, that won't happen, the "price" of gold will continue to rise rapidly, then dip slightly, then go into another bubble, and another, until something happens to stop the cycle.

I stand by $2,000 in 2010.

By the way, 1140 today.