Precious metals are breaking out

rono

Howdy folks,

The pm's have been breaking out. Gold passed $2,000 and silver not only blew through $25 but just now $26. I started scaling up yesterday from my hold position (which is a bit crazy for you normal peeps). I'm mostly playing the junior silver miners. They can be accessed at http://www.kitcosilver.com/equities.html However, there are some serious nose bleed stocks on this list so please be prudent.

and so it goes,

peace,

rono

MikeM

Glad to see you post on this topic @rono. Goes back to your Asia and the Miners days... maybe without the Asia part

I've never been successful with the miner ETFs, so I've been playing this break in a more timid fashion with IAU and to a lesser extent, SLV. Although only ~7% now, I've doubled my holdings since the end of 2022, initially because of the potential for the political crazies who could hold the country hostage during debt ceiling talks, but there are other headwinds.

yogibearbull

Dollar remains key for PMs.
https://stockcharts.com/h-perf/ui?s=GDX&compare=GDXJ,UUP,GLD,SLV&id=p49896375419

hank

MikeM said:

”Goes back to your Asia and the Miners days ...”

When the **** was that? Back in the 90s? Some here weren’t born yet. Agree - it’s great to see @rono chiming in.

Recently sold small spec stake in a silver miner (a case of the kitchen getting too hot). Still have a p/c mining fund owned many years. And of course there’s PRPFX. Also have a physical metals fund (the kind @MikeM prefers). And a CEF that plays around in gold (hopefully with somewhat more downside protection). Don’t overlook some of the industrial miners like RIO, GLNCY, BHP. These may catch some of the tail wind while spreading out the risk more.

I believe in moderation. When these things correct it resembles the biggest tree in the forest crashing down.

MikeM

I've lost tract of when that was @hank. Definitely Fund Alarm days. I think I started watching FA around 2006-7 or so so probably around that time. PMs and Asia EM were the hot sectors. Harry Brown's permanent portfolio was also talked about a lot. (rono might have called the consistent post 'asia and the metals' now that I think about it).

hank

MikeM said:

I've lost tract of when that was @hank. Definitely Fund Alarm days. I think I started watching FA around 2006-7 or so so probably around that time. PMs and Asia EM were the hot sectors. Harry Brown's permanent portfolio was also talked about a lot. (rono might have called the consistent post 'asia and the metals' now that I think about it).

“Asia and the Metals “ was a morning staple on F/A. Already running when I came there sometime around 2000. But @rono may have posted it on an earlier board before F/A. Asia was a different animal geopolitically 25 years ago. Folks who then complained that Asian workers were taking away U.S. jobs now complain that the cheap items they bought at KMart / Walmart in those days cost a lot more today.

Unfortunately, I cleared out my trading records back to about 10-15 years. Otherwise I’d have a better reference to say when I first tuned in to F/A. Was around the time I moved out of American Century funds. Posted a question re that matter to which Maurice responded. (Never throw anything away.)

sma3

Ah Fund Alarm! Those were the days!

Old_Joe

Oh my... Maurice. I remember him well.

hank

Boy - You opened the door wide for me. But I’ll withhold fire. Already in enough trouble.

Sven

Although only ~7% now, I've doubled my holdings since the end of 2022,

@MikeM, am I correct to assume that percentage is your portfolio? I have owned risky asset but generally in well under 5%.

rono

Howdy folks,

Asia and the metals. Before Fund Alarm, I believe it was Fund Vision with Salil.

That said, the paper and real bullion markets are diverging significantly (i.e. the premiums are widening). Since the banking issue, the demand for physical bullion has skyrocketed. This has led to increases in premiums and further out delivery dates. This increase in premiums implies a market with artificial pricing on the paper side. That's fine and longstanding. What might be different this time, is the int'l flight from the dollar into other species. It might be in slow motion and take years, but we're witnessing the end of the dollar as the worldwide medium of exchange and reserve currency. When that happens, the PM's will rise significantly. I say this because in other currencies around the world, they've been doing better than stateside for years. It all depends upon which currency they're priced in. That's OK. The markets are what they are.

and so it goes,

peace,

rono

johnN

Been slowly add More GLD SLV
Sell pts call weekly NUGT free$$

Friend bought one mill $$ pure gold bars last wk from Texas precious metals

MikeM

Hi @Sven. Well, the 7% might be misleading. It's 7% of my self-managed portfolio. I've mentioned before, 1/2 my money is in a robo, 1/2 I manage. I've held gold in the 3-6% range since covid. I started this year at about 3%. I do think it has legs, so my plan has been to push the percentage to 10%.

Honestly, I don't see gold ETFs as a major risk, any more so than stocks are now. If you said PM/miner funds, I'd totally agree. That volatility isn't for me - anymore.

sma3

So far I think Gold is trading along interest rates. If the Dollar falls because of the budget deficit, increasing interest payments or the fight over the debt ceiling, I think Gold will spike. But for a real increase we would have to become more than the cleanest dirty shirt in the laundry.

It doesn't pay dividends, and has been underwater long term, and is a PIA on tax day, but I think it is still a great diversifier. While you can't shave off a little from your coins to buy gas, I am more than happy if my total portfolio doesn't crash quite so far as it could 'cause I had 2 or 3% in Gold.

hank

@Sven - Picking up on what Mike said, ETFs that invest in the physical metal are less risky (or, at least less volatile) than funds that invest in gold mining companies. So the metal itself experiences less volatility than a group of mining companies inside a fund might. But, longer term there’s more potential profit in the mining companies. I’ve seen anywhere from 3-8% recommended by various observers as the “right” portfolio exposure. And some won’t touch it with a 10-foot pole.

The Permanent Portfolio fund, PRPFX, keeps 25% in gold and silver bullion. And, honestly, I don’t know how they manage to do that and still keep the fund’s volatility as low as they do. That’s one option for those seeking modest exposure to the precious metals. And, a lot of natural resource funds also hold some - usually only in small proportion.

The biggest problem with gold is its utter unpredictability. 50%+ multi-year gains followed by 30% or greater multi-year declines are not unheard of.

2000 + 50% = 3,000

3,000 - 30% = 2,100

Sven

Thanks everyone. Your inputs are most valuable since I am still new with precious metals. Since COVID I hold about 5-10% gold stock, IAU, just to reduce the portfolio volatility. Sold some when it reached over $2000 an ounce and bought more when it down at $1,800. If @sma3 is right, the fight over debt ceiling is coming. Hope both sides can resolve this. So far, it serves as a good diversifier to stocks and bonds with little correlation.

Friend bought one mill $$ pure gold bars last wk from Texas precious metals

Hope @johnN's friend has some place safe to store them.

hank

@Sven - I deleted one incorrect reference in my previous post. GDX is a gold miners ETF and not representative of funds that invest directly in bullion. However, IAU & GLD are a couple that do invest directly in the bullion (generally less risky).

yogibearbull

PRPFX prospectus describes risks of holding gold/silver bullion and coins. https://www.permanentportfoliofunds.com/pdf/Prospectus.pdf

"The gold and silver bullion and bullion-type coins held by the Portfolio’s subcustodian on behalf of the Portfolio could be lost, damaged, stolen or destroyed. Access to the Portfolio’s gold and silver holdings could also be restricted by natural events (such as an earthquake) or human actions (such as a terrorist attack). The gold and silver custody operations of the subcustodian are not subject to specific governmental regulatory supervision. The subcustodian’s procedures may not prevent the deposit of gold or silver on behalf of the Portfolio that fails to meet the purity standards agreed to at the time of purchase. The Portfolio does not insure its gold and silver holdings and the responsibility of the Portfolio’s custodian and any subcustodian for loss, damage or destruction of the Portfolio’s gold and silver holdings is very limited under the agreements governing the custody and subcustody arrangements. In addition, if the Portfolio’s gold and silver bullion and bullion-type coins are lost, damaged, stolen or destroyed under circumstances rendering the custodian, any subcustodian or any other third party liable to the Portfolio (or the custodian or any subcustodian), the responsible party may not have the financial resources (including liability insurance coverage) sufficient to satisfy such claim. Consequently, the value of the Portfolio’s shares may be adversely affected by loss, damage or destruction to the bullion and bullion- type coins for which the Portfolio may not be reimbursed. When holding bullion, the Portfolio may encounter higher custody and other costs than those normally associated with ownership of securities. Gains realized upon the sale of bullion or bullion-type coins will not count towards the requirement in the Internal Revenue Code of 1986, as amended (“Code”), that at least 90% of the Portfolio’s gross income in each taxable year be derived from gains on the sale of securities and certain other permitted sources, except to the extent that the Portfolio has invested in bullion as a hedge with respect to investment in the securities of companies engaged in mining gold or silver."

Sven

@hank and @yogibearbull, thanks for the details. Currently I hold both PRPFX and IAU in my alternative sleeve. Their ERs are cheaper to hold than other alternatives I tried.

Currently the price of gold is over the buying point that I want. Will add in small increments when the price dips from time to time.

sma3

SGOL and GLDM have lower ER (0.17 and 0.10) than IAU or GLD

Precious metals ETFs have 28% capital gains tax rate as "Collectible".

If you are interested PHYS is Canadian and qualifies as a PFIC (Passive Foreign Investment Corporation" and capital gains are taxed at usual capital gains rates ( ie 15 to 20%)

https://www.sprott.com/investment-strategies/physical-bullion-trusts/gold-and-silver/tax-information/

However the forms ( 8621) required are complex and not supported by Turbo Tax so you have to file on paper. As I had a small refund coming I am not terribly worried about processing time.

I think I figured it out but it took a while. I have the time as I am retired and like intellectual challenges ( even with the IRS).

You should do your own calculations if the time and extra expense if you pay someone to do your taxes is worth saving 13% on your capital gains. Probably depends on size of your position.

I am thinking if I have a gain by the end of the year the size of my position doesn't make it worthwhile and I will probably sell it.

Jan

I must admit investing in gold and or silver doesn’t seem to make sense. I’ve seen videos of high profile investors (Schiff) swearing by it but I can’t grasp it’s usefulness.

1. Gold doesn’t seem to have done much in the last decade especially when compared to the stock market.

2. I don’t understand how it would be useful in an emergency. For instance, if I buy $50!worth of groceries the denominations of are much more.

3. If I needed to sell, say $100,000 worth of gold, could I sell it quickly?

4. As far as silver goes, it seems it would need to be stored as it’s value is not as valuable as gold.

I’ve thought of investing in gold but it seems there is more negative articles on it than positive.

hank

So much depends on your perspective. These types of investments aren’t intended for everyone. Think of gold as “a hedge against the unexpected.” Almost by definition, “the unexpected” is that which is very unlikely to occur (political chaos, hyperinflation, asteroid strike, nuclear war).

@Jan is correct. Long term, gold shouldn’t perform as well as investments in solid growth companies. That said, precious metals tend to run to the extremes on both the up-side and down-side. As fertile ground for speculators they might be attractive if you have the stomach. If you are unable to find even a 3%-5% spot in your portfolio for that kind of hedge or speculative gambit, no problem. Life goes on.

Yes, I agree, there are obstacles to owning / trading physical gold. I’d not want that hassle. But there are, as I’m sure you are aware, funds that invest in it in various ways. Just $50 on a grocery store visit? I rarely escape for under $150. A halfway decent bottle of single malt runs $40-50 alone.

BTW - The OP was by @rono who has tracked the precious metals forever. Rono’s forgotten more about the metals than most of us ever knew. I tend to agree with his point of view. However, making such predictions about gold involves looking at the technical charts as well as trying to anticipate correctly things like geopolitics, inflation, Federal Reserve policies and how other asset classes that vie for assets will perform going forward. And, Oh I almost forgot …. the herd instincts and behavior of investors.

hank

Yuppers. Gold posted a $50+ gain yesterday and is up $62 today at last look. Miners going wild. OPGSX (used to own / still track) was up 5% yesterday. Silver’s been leading as it often does. Gold peaked above $2100 a week or two ago (a record high). Almost back to that level today.

Not a recommendation. Play at your own risk.

WABAC

When, oh when, will it trickle down to the miners?

Sure am looking forward to dumping real estate in the next day, or two.

MikeM

Gold's been rocking since the start of October. I'm not heavy into IAU, but I've kept a small percentage since the covid year, ~ 3-4%, for diversification. The last breakout call on this back in April fizzled out quickly. Hope this one sustains. I know someone recently in Barrons was touting a breakout too, especially for miners. The miners are to volatile for me so I will stick with the gold play.