Why most people buy PMs for the wrong reasons...

I believe that it's fair for those CFOs/CIOs/COOs/CMOs/CEOs of billion dollar corporations, yes. They do a job that 99.999% of the planet wouldn't know where to begin. Their compensation is generally commensurate with the outcome of their performance. Now, if you're discussing golden parachutes, that's slightly different. That's a reflection of how good their representation is at negotiating settlement deals.

As a caveat to the above concept, I, personally, only recommend investment up to the grant/match point in a 401k. The tax deferral is of limited value unless you expect your tax bracket to be significantly lower in the future than it is today. America's tax code is structured to benefit long-term capital gains investments. The only time I advocate 401k use beyond the matching is when a Roth 401k is an option and a Roth IRA is not.

Second caveat: If you're absolutely horrible with your finances, plan on getting sued, or simply don't pay your bills, the 401k is a brilliant way to protect your assets, as it usually can't be accessed by creditors, and it's a form of forced savings, since you never see the money in your bank account.

 

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I had a new customer pester me by phone all day today because he needed to buy PM's TODAY.

He said tomorrow would be too late.....for all of us.


Finally visited a bunch of ATMs (as we don't take credit cards at all and checks from new customers especially on a Sunday) and actually purchased five TO of gold and 80 TO of silver.

See you all tomorrow......or NOT.

Heh.

 

Maybe he owes money to some mafia group that only accepts payment in gold/silver... and if he didn't make good, he'd lose his house/legs? Beyond that... how did he pull out $14k+ from ATMs on a weekend? Did he have 28 ATM/check cards? Did he ATM his CCs? (That's simply dumb, if he did, since interest accrues at the highest contract rate the moment the transaction occurs, and you immediately have to pay a 3% haircut... so he basically paid a 4-5% premium by not waiting until tomorrow.)

 

Probably this. I am only giving the url, as it contain religious comments, so be forwarned. No comments on the forum concerning it please, just FYI if you want. Jim
http://2fletchdr222.blogspot.com/2016/09/major-worldwide-warning-for-october-3_

 

The link does not work for me (I get a page-does-not-exist) but ... wait ... maybe that is a sign that the end is coming soon. Let's see - today is the national holiday here in Germany, and the weekend is also the Jewish and Islamic New Year's Day. No sign of an imminent collapse so far, hehe.

Christian

 

I got the same error. If you remove the pagination, the website will populate the story as the top blog entry.

http://2fletchdr222.blogspot.com/

 

I think current mainstream ideology (Keynesianism) could be viewed as a "mania" of sorts. Considering Keyne's disdain for savings, I'm betting bullion holders will be pleasantly surprised as his theory is gradually ("then suddenly." lol) abandoned.

 

Oh dear Lord, you had to bring up Keynesianism... Now we'll have to wait to hear Kurt spew forth his wisdom on this subject! Great just ruined the whole day.

 

Sounds like a lucky (here it comes... the dreaded "s" word..) speculation to me.

I bought a good bit during one of silver's previous dips (in 2012). It had pulled back some 30% from its high, and was showing signs of stabilizing. It went on to pop back up by 15% or so -- and then drop another 50%, to the price at which you made your "investment".

You could see your silver spike up to two, or three, or a hundred times what you paid for it. Or you could see it sink to $7-8. But you won't see it paying interest, or distributing dividends, or growing due to good management and business practices.

 

Had to quote just to (lol)!

 

Well I woke up this morning. Beautiful day outside. The rest of you guys OK?

 

That's not 100% true. True it won't pay interest or pay dividends. But good management it can grow by not trading on its price but on its gold/silver ratio. I've grown my silver position by trading gold and silver based on ratio without any further investments. So it can be done, but it is more of being long-term than short term advancement. Just my experience.

 

Much like trading options, I enjoy occasionally trading on the gold/silver ratio. That said, I don't consider either situation an investment, at least not a passive one. If I can make more money trading options/PM ratios than doing actual work, great. Unfortunately for me, the market hasn't been volatile enough to get that done as of late.

Now back to the ratio. Generally speaking, the ratio sustains a range between 40:1 and 65:1. Anything outside of that range is supposed to indicate buy/sell signals. Now, the problem is the ratio currently sits near 70. Based upon the 40-65 range, the indication would be to trade into silver. The problem is this same signal has been present since Jan 2014. If you traded into silver back then, you'd still be down relative to gold today. Relative to the dollar, you would be a little down, but about even.

Of course, some will say "oh, but you should be trading the swings." That's great if you know exactly when the swings would occur, but, for the most part, that's speculation. I've done it before and made nice profits for myself and clients, but I knew it was speculation, and presented it to clients as both a speculation and hedge. My recommendation was 11% of their portfolio due to the economic environment. That was just over a decade ago. I divested of silver for myself and clients the first time it hit $40. Some complained as it continued to run closer to $44/$46/$48. Some clients asked if they should buy back in as prices hit $35/$30/$25, but I said no. The acquisition price was ~$17, and for a very specific reason. As silver passed down below $20, I told them that it's attractive as a speculation, but not as a hedge. Why? Because things are somewhat back to normal now. At no point was silver an investment. It was a speculation and insurance against temporary economic instability. The money that went into silver at the time was there to prevent the actual investments from being sold in a panic.

That all said, my point is that even using the ratio is speculation, as you're betting that the dollar will not strengthen more than fear supports the price of gold. Any bet on the ratio, no matter how extreme, is an underlying bet on the price of gold being sustained. Why? No one who claims to invest in silver does so expecting the price of gold to drop. They want gold to keep going up, and they're hoping silver catches up. With that in mind, at least to me, the ratio feels like an excuse to hold onto silver passively, rather than one to trade on the metal actively. If that's the case, it's simply an emotional rationalization of PM speculation.

 

Yes sir Hillary!

 

Huh?

 

More about Sir Edmund Hillary here:
https://en.wikipedia.org/wiki/Edmund_Hillary
But yes, he does not have much to do with this PM/BI topic.

Christian

 

Right... the first team recorded to climb Everest to the summit... but again, huh?

 

Yep, that guy. And I am sure you guys do not want to discuss any other Hillaries here.

 

The reality about any investment is getting in and knowing (having a plan) of when to get out, whether to limit losses or to cash out profits.

A friend of mine invested heavily into GoPro at $56 a share a year back. How is their investment now? This of course can be repeated over and over again out there.

The important part of any investment is knowing when to get out.
In stocks I identify a 7% reduction trend (excluding economic whacks) to get out. This has saved me tons of losses, though a few times stocks have bounced back too quickly or over the really long haul. But at least I sleep at night.

PMs are the same way. Though PMs tend to have longer, long term trends than stocks which can have more small volatile moves. And PMs have minor outside influences versus stocks (compare to Valeant VRX for example). If you buy into Gold at $1600 and it started a slow decrease you need to have your plan of when you get out of any investment.

Enron or not, there's many stocks that crash out there or simply lose tremendous value. I had friends that worked for Consumer's Power that had their retirement in their own companies CMS stock back in the early 90s when the stock went from the mid30s down to about 5, and many did nothing but watch it sink. Imagine your retirement acct being 1/6 of what it was. I had friend *not retire* because of it.

Look at any sector and you'll see this. Using charts based on DOW, S&P etc show a trend going up. Since their inception they had steady and low rising components. Then, I recall they started changing their core components much more frequently (or I started paying more attention) which give them much more of a meteoric rise. Thus any investor also needs to review their investments at all times and swap out to try and do the same thing, or get into more "stable" investment like some mutual funds.

no company over time seems to be immune. I had GE years ago when it was over 80 (before a split). I recently bought it at 24. One has to decide if they are in it for the long haul, or short haul and determine their "out" point for any investment.

The main issue with people and any investment is that they have some "emotional" attachment or they get "itchy" when things "look" good to their investment. And when the investment turns down they decide to "stick with it" when they should bail to minimize losses.

But doing swing investment, day trading, options etc you really know to stick your your plan. As NorthKorea stated above, he develops plans and sticks to them.

 

How's that PM guy who had to get in yesterday doing now?