TRYING TO "Play the GSR" -- HORRIBLE IDEA

Discussion in 'Bullion Investing' started by goldcollector, Apr 17, 2017.

  1. Bman33

    Bman33 Well-Known Member

    I think the OP meant the scenario you just described would never happen again because silver will never get that high. He's a Silver Bear. For me I am a little skeptical but open to it. I.e. If the GSR gets to 80 I'll start trading gold for silver.
     
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  3. sakata

    sakata Devil's Advocate

    I've actually used this example in the classroom to show the effect of compounded inflation. But I use a $2 bill and a 1/10oz coin.
     
  4. V. Kurt Bellman

    V. Kurt Bellman Yes, I'm blunt! Get over your "feeeeelings".

    Note to the unwary: take whatever sakata says and practice the polar opposite of it. You'll do far better than he does.

    Here's what's true that people like sakata will NEVER see. The 2008/09 collapse led metals DOWN SHARPLY (go look it up). What drove them to their 2011 highs was false belief that the countermeasures to the collapse would create rampant inflation, which they never did. Why? Because had the Fed and world central banks NOT done the extraordinary things they did, we would have had a Depression that would have made the 1930's look like a walk in the park. The Federal Reserve truly saved the world's economy. The fundamentals were SO DEflationary that all that inflation-inducing policy merely fought the fundamentals to a draw. It was brilliant.

    ONE thing, and ONLY ONE thing can take metals higher - INflation. And it ain't out there ... yet.
     
    Last edited: Oct 27, 2017
  5. Deadline

    Deadline Active Member

    All the FR did in 09 was to skim off more of the tax payers hard earned money, give it to the filthy rich and then kick the can down the road. You are right about one thing, that what is coming down the pipe this time will make 1930 look like a cake walk. Right on que all the lemmings are flocking into the stock market with false hope. How do you feel about all these companies buying back their own shares in a over valued market.
     
    Last edited: Oct 27, 2017
  6. V. Kurt Bellman

    V. Kurt Bellman Yes, I'm blunt! Get over your "feeeeelings".

    If they thought they were overvalued, they wouldn't be buying them back. The earnings are there to support these valuations. Along with "enforced" money coming into the market, from non-voluntary sources such as pensions and 401-K's, the fundamentals are there to support these equity prices. The problem is that the incentives are to "mark" these profits as overseas, due to world taxation rate differences.
     
  7. sakata

    sakata Devil's Advocate

    How many of them are? It seems like a pointless exercise. They'd do better to sit on their cash and wait for the crash.
     
  8. rrholdout

    rrholdout Active Member

  9. TheFinn

    TheFinn Well-Known Member

    If I could borrow money at 0% interest and purchase back my stock, which does two things: 1) I don't have to pay anyone dividends, and 2) I create demand for the remaining stock, which drives the price up, without creating new products or ideas. Then I sell the stock, make a grundle of money and pay off the 0% loan. Wash, rinse, repeat.
     
  10. V. Kurt Bellman

    V. Kurt Bellman Yes, I'm blunt! Get over your "feeeeelings".

    Close, but not quite a cigar. Buying back stock shortens supply, which isn't QUITE the same as creating demand, but it can play that part on TV. For the high tech companies in particular, stock buybacks (becoming treasury stock) does a couple of things. It insulates from activist investors, making a coup d-etat much harder to carry off, and it gives the Board more ammunition for buying a company without cash or to cover stock options for new hires.

    The race is on for becoming the first $1 trillion market valuation openly traded company. The only question is will it be Apple or Google? By the way, NEITHER of these companies is suffering from any inability to create new products or ideas. (He says on Day 1 ordering day for the iPhone X.)
     
    Last edited: Oct 27, 2017
  11. MrOrange1970

    MrOrange1970 Active Member

    Just read this. OP uses the word "never".
    There are two words I hate:
    Never and Always....

    Metal markets are too confounding for me...Looking all the way back to the 70's silver boom, I just can't find a rational rhyme or reason.

    And the commercials for gold, where an ounce of gold 100 years ago would buy me a great suit and an ounce of gold today would do the same....well that's basically telling me that gold held with inflation...I'll pass.
     
  12. sakata

    sakata Devil's Advocate

    That's the whole point of having a small part of your portfolio as gold.
     
  13. MrOrange1970

    MrOrange1970 Active Member

    I can't argue having gold as a small portion of a portfolio....though my thoughts are that it's still more volatile than a good Cap Preservation fund...though I'm in the wrong forum to argue that!
    I will say that it's way prettier than a Mutual Fund any day of the week!
     
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  14. baseball21

    baseball21 Well-Known Member

    And if you bought that gold 5 years ago you have done horribly with it while most stocks from than have done great.

    You'd also still have to sell the gold coin for money to spend it.

    We all know you can cherry pick time frames to make it work, you can also find other time frames to disprove it. What you could have done in 1929 is irrelevant though to anyone who wasn't alive at that time. I wasn't alive then so I couldn't have done anything in 1929. The idea that you can just blindly buy metals and they will always be worth more is just false
     
    Last edited: Oct 27, 2017
  15. V. Kurt Bellman

    V. Kurt Bellman Yes, I'm blunt! Get over your "feeeeelings".

    Absolutely! Just ask the dealers who bought gold coins from me at the August 2011 ANA show and back home in Lancaster during October 2011 when they bought my silver I had for sale. They BOTH took a BIG hit.

    I gave my Money Talk at ANA about how metals were due for a fall, then went out on the floor and got over $1920 an ounce, and went home. And I haven't bought a lick of gold ever since.
     
  16. baseball21

    baseball21 Well-Known Member

    I believe that, the paper trading is the only thing that slowed the fall in my opinion. It was almost impossible to sell at some points when it started really going down. That's also one of the problems with people investing in metals, for it to work you have to be prepared to sell when it runs way up and not think that the sky is the limit
     
  17. V. Kurt Bellman

    V. Kurt Bellman Yes, I'm blunt! Get over your "feeeeelings".

    There IS a point where I might get back into metals generically, but it ain't here yet, and I may not live long enough to get there, either.
     
  18. baseball21

    baseball21 Well-Known Member

    I'm in it by default from coins that I like and got because I like them, but I agree we aren't there yet for actual metals. If I did anything right now it would be the paper ones and take the profit when the chance comes
     
  19. sakata

    sakata Devil's Advocate

    This discussion will always go in circles. There are those people whose focus in life is centered around acquiring more dollars. There are those whose focus is acquiring, or at least maintaining, more precious metals. The two will always have different goals and will never agree.

    For me, I have no need of extra dollars. I have enough of them to survive on as long as they maintain their value. So all I am concerned about maintaining a source of value if the dollar fails. For me that means precious metals, for others it may mean something else. Those for whom it means something else (real estate, for example) probably are not positing in a bullion forum. If the dollar does not fail I don't need the metals.
     
  20. V. Kurt Bellman

    V. Kurt Bellman Yes, I'm blunt! Get over your "feeeeelings".

    That's why I intentionally used the qualifier "generically". I buy items that happen to be silver, but I buy no silver because it IS silver. I'd buy the same items if they were tin.

    But gold? I won't even buy anything that's MADE OF gold. That's how inflated and unreasonable I think gold prices are.

    The high GSR doesn't tell me silver's way too low; it tells me that gold is way too high.
     
  21. V. Kurt Bellman

    V. Kurt Bellman Yes, I'm blunt! Get over your "feeeeelings".

    From cnbc:

    ***
    Amazon, Alphabet (Google), Microsoft, and Intel all beat earnings expectations and saw their stocks shoot up after hours.
    ***

    Now, bullion bugs, tell me again how these valuations are just a bubble. As long as tech keeps exceeding Wall Street estimates for earnings, the tech sector is NOT in a bubble.

    Amazon:
    Street estimate: 3 cents a share
    Actual : 52 cents a share

    Alphabet:
    Street estimate: $8.33 a share
    Actual : $9.57

    Microsoft:
    Street estimate: 72 cents a share
    Actual : 84 cents a share

    Intel:
    Street estimate: 80 cents a share
    Actual : $1.01

    Bottom line: Wall Street is not Overvaluing tech, they're Undervaluing it.
     
    Last edited: Oct 27, 2017
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