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3 reasons to ride the silver bull [ping rono & commodities bugs]
I'm not sure there is a reasonable level, per se, to start buying silver - or to stop buying silver. It's all about you and your portfolio and your goals and objectives.
I sold some (25%) of my paper holdings earlier this week and some more (50%) today. However, I'm looking to add to the physical side at these 'sale' prices and this bespeaks my continued long term bullishness for both gold and silver (and all 'real stuff' that holds its value).
John, I'm a momentum investor and as such have to have an exit strategy for any play I make. Otherwise, I risk giving all my gains back when the trend reverses - and ALL trends reverse. With this particular trend - gold and silver - I was able to spot it early on and climb on board sooner than most (I played the Hunt Bros. bull back in the late 70's and used my silver profits to subsidize my GI Bill while finishing my degree.) I was buying gold at 335 and silver at 4. This has been a very good run and if it's coming to a pause for the nonce . . . so be it. If it's coming to an end . . . so be it.
I honestly think that silver (and gold) had gone up so far and so fast, it simply had to pause and consolidate. Backing and filling, old Carl used to call it. As the article mentioned, there were several factors at work and with any asset class that has gone parabolic like silver - these happenings are to be expected. I see absolutely no changes to the fundamentals that underpin the bull market in precious metals.
Now as for your question about where to start buying - IFF you feel you need some specific addition to your holdings, be it silver or pork bellies or shares of GS or DODGX - it's whatever the price is - when it's rising - not when it's falling like right now. Wait until it turns around and starts back up to start buying. At that point, some would advocate using a Dollar Cost Averaging approach. That's OK with your pay day 401 K contribution or other uberlong term investments but not for a speculative play. Accordingly, I modify the basic DCA approach and add the criteria that at each successive buy point, my play must be making money. I only add to winning plays, as it were. I'll buy 25% of my intended play and watch it for some period of time. If it makes me money, I'll buy another 25% . . . and watch it. If it makes me money, I'll buy the remainder. Gary called it 'scaling in'.
And right at this particular moment, I'm doing the reverse and instead of scaling into an investment, I'm scaling out. It's my exit strategy. In this case, I'm using around a 10% pullback as a trigger point. Call it a mental stop loss, if you will. Note that where I'm paring my play is with SIL, SLV, GDXJ, CEF and SLW. I am holding to PRPFX and commodity related funds. And I'm down to my paper 'core' levels so this is about it.
Oh, and while I'm at it, I really don't like the stock market right now one damn bit. Do you realize how juiced this sucker is with QE cash?!? If the Fed takes away the punch bowl . . . look out below. That's why I don't see them able to stop the money presses. And as such, gold and silver are still attractive.
Hey rono- re the stock market, an interesting article in today's WSJ indicating that most of the hi-freq traders have pulled out because the very low trading volume doesn't work well for their rapid trading algorithms. The article also suggested that the low volume is at least partially due to "ordinary" traders pulling out because of the fiascoes ("unexplained" severe market drops, etc.) attributed to... the hi-freq traders! If true, looks like another case of killing the golden goose. The games never end.
I'm sitting on my silver coins- just in case... my wife wondered a few weeks ago if we should sell, because we both remembered the last time around with the Hunt Bros. I decided not to... we didn't need the lousy 20k or so, and I'm with you with respect to anticipated inflation.
"Oh, and while I'm at it, I really don't like the stock market right now one damn bit. Do you realize how juiced this sucker is with QE cash?!? If the Fed takes away the punch bowl . . . look out below. That's why I don't see them able to stop the money presses"
My thought is that the point has been reached where there's a fork in the road. Either further QE and the dollar starts heading towards never-before-seen realms under 70 on the DXY, or this turns into another variation on 2008. Elsewhere, apparently the requested raise for the debt ceiling is $2T, which will hold us over until sometime later next year, where we'll get this whole fun discussion of should we/shouldn't we raise it again.
Data isn't great and you may get some selling throughout the late Spring and into early Summer. Bernanke announced QE2 in late July, and maybe you get a repeat of that this year if further QE is in the works - and, like Rono, I don't think they can stop. Silver almost appeared to be a leveraged play on the metals; I think it's interesting to see the difference in gold vs. silver YTD or so; a rise in silver that took months was washed out in days. Gold hadn't gone up massively this year and the retracement was - in my opinion - at least fairly orderly. The silver issue is also likely due to margin raises every other day. I don't think the fundamentals for either have changed.
The last couple of days, however, are a reminder with commodities that they can be significantly volatile; both commodities and stocks have gone up over the last couple of years in a manner that has made many people entirely too comfortable. I continue to think that everyone should continue to own commodities, but how much is comfortable for anyone depends on their risk tolerance. Where the silver decline ends is anyone's guess. I don't think that the metals were over-invested - if they were, they'd be higher; however, you're dealing with thin markets and large profit taking and/or activity related to margins appeared to create a substantial ripple effect that continues this morning. Speaking of high-frequency trading, there was a discussion with a trader on "Fast Money" last night regarding high-frequency trading in commodities.
I definitely like the metals, I get the fundamentals, but I think you also have to really focus on the ag space, as well, for a host of different reasons, including declining agricultural land. I do continue to like a few different stocks - including Brookfield Infrastructure (BIP), which is a really unique company (a multi-national company with ports, power transmission, timber and other assets in Asia, Europe, the US and South America) and under the Brookfield umbrella. That is one thing I'd actually add to, and it offers a nearly 5% div.
You mention the ag space and mention BIP which I had yet to hear of - thx - I failed to mention my fav dividend play for quite and while and that's NGV
Another cutie that Mark turned me onto is JTD -tax advantaged income.
Whilst gold and silver are far from done, I think we need to watch ag and water. Although the action looks to be involved with all the various types of 'real stuff' look for a divergence in any of the commodities.
Silver? Gold seemed to reverse today but it's only had a steady, stellar and outsized run this past year - unlike silver which was more akin to a hard hit of amy nitrite while tripping. Silver's pausing but I'm not sure which way it's headed right now. Longer term is bullish, but there's many a slip betwixt the leap and the saddle . . .
This is May and that's generally the slow season for metals. You want to be long this fall - say around Labor Day. 'til then, I've got some annual silver coins I need to get, so any price relief is welcome.
The silver market had gone nuts and was ripe for respite. It got hit with a perfect storm of negativity and that caused about a 25% drop. It may be more before it's done but that's OK. As I mentioned above, we're going into the off season for gold and silver. It's been a great year, however. whew.
And for your junk silver, 25x face isn't as good as 30x, but you paid 1x so it ain't too shabby. teehehe take care,
Hello folks...As my neighbor always say "it's better NOT TO GET RUN OVER by a truck while trying to 'pick' left over pennies/nickles on the highways" in a sense. I think the market could be heading toward a bigger sale the next few months but we'll see. Perhaps 10s-15s% corrections could be headed our ways... oil/commodities would take a huge hit if this is the case. but then again I was always wrong before...
In terms of the NCV fund that Rono mentions, that manager does manage a few mutual funds, such as AGIC Growth and Income (AZNDX), which I think is a unique and little known fund that has put together a good track record so far. Not saying the mutual fund is a better choice, but saying that the manager has demonstrated skills with a number of funds. The closed end fund Rono mentions definitely offers a higher yield than the mutual funds.
BIP/Brookfield Infrastructure one of the spin-offs from giant parent company Brookfield Asset Management, which does hold a stake in the company. I just think it's a neat mix of diversified global real assets, pays a nice dividend and I like Brookfield management.
I have a couple of little water rights investments as part of other things (RIT Capital Partners has Summit Water Development/United States/Water Rights/0.9% - a water rights fund), but it's really unfortunate that more alternative asset classes (such as water rights and private equity, among other things) are not available in the US market to the retail investor.
Comments
I'm not sure there is a reasonable level, per se, to start buying silver - or to stop buying silver. It's all about you and your portfolio and your goals and objectives.
I sold some (25%) of my paper holdings earlier this week and some more (50%) today. However, I'm looking to add to the physical side at these 'sale' prices and this bespeaks my continued long term bullishness for both gold and silver (and all 'real stuff' that holds its value).
John, I'm a momentum investor and as such have to have an exit strategy for any play I make. Otherwise, I risk giving all my gains back when the trend reverses - and ALL trends reverse. With this particular trend - gold and silver - I was able to spot it early on and climb on board sooner than most (I played the Hunt Bros. bull back in the late 70's and used my silver profits to subsidize my GI Bill while finishing my degree.) I was buying gold at 335 and silver at 4. This has been a very good run and if it's coming to a pause for the nonce . . . so be it. If it's coming to an end . . . so be it.
I honestly think that silver (and gold) had gone up so far and so fast, it simply had to pause and consolidate. Backing and filling, old Carl used to call it. As the article mentioned, there were several factors at work and with any asset class that has gone parabolic like silver - these happenings are to be expected. I see absolutely no changes to the fundamentals that underpin the bull market in precious metals.
Now as for your question about where to start buying - IFF you feel you need some specific addition to your holdings, be it silver or pork bellies or shares of GS or DODGX - it's whatever the price is - when it's rising - not when it's falling like right now. Wait until it turns around and starts back up to start buying. At that point, some would advocate using a Dollar Cost Averaging approach. That's OK with your pay day 401 K contribution or other uberlong term investments but not for a speculative play. Accordingly, I modify the basic DCA approach and add the criteria that at each successive buy point, my play must be making money. I only add to winning plays, as it were. I'll buy 25% of my intended play and watch it for some period of time. If it makes me money, I'll buy another 25% . . . and watch it. If it makes me money, I'll buy the remainder. Gary called it 'scaling in'.
And right at this particular moment, I'm doing the reverse and instead of scaling into an investment, I'm scaling out. It's my exit strategy. In this case, I'm using around a 10% pullback as a trigger point. Call it a mental stop loss, if you will. Note that where I'm paring my play is with SIL, SLV, GDXJ, CEF and SLW. I am holding to PRPFX and commodity related funds. And I'm down to my paper 'core' levels so this is about it.
Oh, and while I'm at it, I really don't like the stock market right now one damn bit. Do you realize how juiced this sucker is with QE cash?!? If the Fed takes away the punch bowl . . . look out below. That's why I don't see them able to stop the money presses. And as such, gold and silver are still attractive.
peace,
rono
I'm sitting on my silver coins- just in case... my wife wondered a few weeks ago if we should sell, because we both remembered the last time around with the Hunt Bros. I decided not to... we didn't need the lousy 20k or so, and I'm with you with respect to anticipated inflation.
Take care, bro.
My thought is that the point has been reached where there's a fork in the road. Either further QE and the dollar starts heading towards never-before-seen realms under 70 on the DXY, or this turns into another variation on 2008. Elsewhere, apparently the requested raise for the debt ceiling is $2T, which will hold us over until sometime later next year, where we'll get this whole fun discussion of should we/shouldn't we raise it again.
Data isn't great and you may get some selling throughout the late Spring and into early Summer. Bernanke announced QE2 in late July, and maybe you get a repeat of that this year if further QE is in the works - and, like Rono, I don't think they can stop. Silver almost appeared to be a leveraged play on the metals; I think it's interesting to see the difference in gold vs. silver YTD or so; a rise in silver that took months was washed out in days. Gold hadn't gone up massively this year and the retracement was - in my opinion - at least fairly orderly. The silver issue is also likely due to margin raises every other day. I don't think the fundamentals for either have changed.
The last couple of days, however, are a reminder with commodities that they can be significantly volatile; both commodities and stocks have gone up over the last couple of years in a manner that has made many people entirely too comfortable. I continue to think that everyone should continue to own commodities, but how much is comfortable for anyone depends on their risk tolerance. Where the silver decline ends is anyone's guess. I don't think that the metals were over-invested - if they were, they'd be higher; however, you're dealing with thin markets and large profit taking and/or activity related to margins appeared to create a substantial ripple effect that continues this morning. Speaking of high-frequency trading, there was a discussion with a trader on "Fast Money" last night regarding high-frequency trading in commodities.
I definitely like the metals, I get the fundamentals, but I think you also have to really focus on the ag space, as well, for a host of different reasons, including declining agricultural land. I do continue to like a few different stocks - including Brookfield Infrastructure (BIP), which is a really unique company (a multi-national company with ports, power transmission, timber and other assets in Asia, Europe, the US and South America) and under the Brookfield umbrella. That is one thing I'd actually add to, and it offers a nearly 5% div.
You mention the ag space and mention BIP which I had yet to hear of - thx - I failed to mention my fav dividend play for quite and while and that's NGV
http://www.bloomberg.com/apps/quote?ticker=NCV:US
Note the yield of almost 12%.
Another cutie that Mark turned me onto is JTD -tax advantaged income.
Whilst gold and silver are far from done, I think we need to watch ag and water. Although the action looks to be involved with all the various types of 'real stuff' look for a divergence in any of the commodities.
Silver? Gold seemed to reverse today but it's only had a steady, stellar and outsized run this past year - unlike silver which was more akin to a hard hit of amy nitrite while tripping. Silver's pausing but I'm not sure which way it's headed right now. Longer term is bullish, but there's many a slip betwixt the leap and the saddle . . .
This is May and that's generally the slow season for metals. You want to be long this fall - say around Labor Day. 'til then, I've got some annual silver coins I need to get, so any price relief is welcome.
pax,
rono
The silver market had gone nuts and was ripe for respite. It got hit with a perfect storm of negativity and that caused about a 25% drop. It may be more before it's done but that's OK. As I mentioned above, we're going into the off season for gold and silver. It's been a great year, however. whew.
And for your junk silver, 25x face isn't as good as 30x, but you paid 1x so it ain't too shabby. teehehe
take care,
rono
BIP/Brookfield Infrastructure one of the spin-offs from giant parent company Brookfield Asset Management, which does hold a stake in the company. I just think it's a neat mix of diversified global real assets, pays a nice dividend and I like Brookfield management.
I have a couple of little water rights investments as part of other things (RIT Capital Partners has Summit Water Development/United States/Water Rights/0.9% - a water rights fund), but it's really unfortunate that more alternative asset classes (such as water rights and private equity, among other things) are not available in the US market to the retail investor.