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Precious Metals - Where to now St. Peter?

edited December 2011 in Off-Topic
Howdy folks,

First of all, let me say that I was completely wrong about where I thought gold and silver would finish the year. I believe said $2000 and $40, although it might have been $2000 and $50. Right now it's at $1607 and $29. I have not sold, nor reduced my position, but I haven't been trading this market for years. I just bought and held.

Note the one writer talking about a new divergence between the paper and physical prices of the metals. I noticed that the premium on 2011 silver eagles was very high a couple of weeks back when I picked up some christmas presents. The sticker price is not falling with the paper price. This is what a happend a few years back. The paper price had been driven below what the street market felt the physical metal was worth. What this resulted in was both sky high premiums and restricted supply. Classic Econ 101 Supply/Demand curve in a market with price controls. Either limited supply or increasing the vig. This is what happend to the price of gasoline during Nixon's price controls AND what is still happening to the credit market with interest rates been kept artificially low.

What's been going on with the POG has been the strong dollar AND the dollar being used as Haven AND end of year profit taking and a lot of buying and selling paper bullion. Note that gold bull market as measured in all other currencies hasn't even slowed. The one writer has resistance around $1725 and support around $1500. I'm good with that. Oh, and Gartman did say he was out but also stated later that he just thought the pullback was just that and the overall gold bull market was intact. He's a trader. I'm not. I've seen absolutely no change in the overall fundamentals on the global macro-economic level, nor much at the local micro level. A lot of economic activity has gone offgrid, but I'm not sure how much. Lot's of barter and whatnot.

I still think that a prudent investor needs to have 5-10% of their wealth in precious metals. I see that as an investment. More than that could be called speculation, if you will. I know many that have a quite higher percentage - I'm around 20%, but it's a personal thing.

Riders on the Gold and Silver Storm

COMEX: The march to irrelevance

Look at this chart

Here's the local coin shop's site. Note Pat's Weekly Commentary and also the Quotes. He writes quite a lot for the coin industry rags and is one of the greatest bulls I know. The former is his monthly rant about the system, but makes for interesting reading. I'm not sure I'm as much a true believer as he is - I really don't even consider myself a gold or silver bull. I'm a momentum investor, but . . . this, boys and girls, is a real gold bull.

The Quotes page is very key because you can compare the premium on the various types of physical bullion.

I don't know that I'm quite so bullish as Pat, but I see no end to the gold and silver bull markets. None. I see the prices to continue to climb and I'm good with $2000 and higher. The demand is too deep and broad based for too many reasons to too many people and institutions and nations. Does it makes sense? feh. WTF cares if it makes sense. It's the market and mass psychology and they have never had to make any sense.




  • I own 100 shares GLD but the funds I also own have large positions such as PRPFX, SGENX and WASYX. Do you include the amount held by funds?
  • edited December 2011
    Hi Rono,

    I have not read through the links yet, including Pat's.

    Just a few blips about where things may travel going along in the next year or 5, as related to the metals; as well as many other things.

    ---Debt and deleverage; from the financial folks to the citizens of the developed countries. This includes the potential of continued tight spending habits of some of we boomers. There are many intertwined pieces with this; but the overall possible affect is deflationary, eh?

    ---Crazies of the world; being likely new troubles in the middle eastern area. This could include Iran, Iraq, Eygpt, Libya, Syria and newcomers. I would not be surprised to find any of these spots to place pressure upon the U.S. as to "what to do now?" The overall affect could be inflationary as related to crude oil and renewed interest in the metals, as well as U.S. Treasury issues and a much stronger dollar.

    Any mix of the above is possible; and although inflationary from the respect of crude prices moving up from turmoil, this could have the potential to also lend power to slowed spending from consumers and another brick in the deflationary basket.

    With any of these in place, along with the crazies in D.C.; a possible weary consumer in debt and/or not willing to go further into debt, I am able to consider a most difficult time with being in the proper investment areas to be both somewhat safe and hopefully have some profit, too.

    Deflation (some areas), inflation (some areas), sideways (some areas) for the investments.

    I did not directly imply what may come to pass for the metals; but folks better be on their toes for several more years to find which directions the continued unwind from the 2008 melt flows. And yes, Europe will continue to be a very major force in the happiness or lack of; for the investment world.

    Obviously, there are many other areas and aspects that may lend a force to any of the above.

    The most brilliant and/or lucky (right place, right time) of folks stand to have enormous profits in the next several years. Our house will merely attempt to stay to the positive profits side, no matter how small.

    Lastly, I wish for otherwise; as to more positvie aspects. I am either in a mental rut and will get the investment areas wrong; or will discover someone's writing and/or thoughts that will sway me to discover that things are not as I think I see them this day.

    Take care,

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