Posted on 08/23/2011 2:22:52 PM PDT by Kaslin
If you are long gold, remember pigs get slaughtered.
I know all the reasons to be long gold. Fear. Countries are debasing their currencies. But does your local grocery store have a scale and an up to the minute $GLD ticker so that you can actually use it? You can convert gold holdings to cash, but the transaction costs need to be added in to see your real return on investment. You also won’t want to convert to cash in a hyperinflation environment which seems to be one of the strongest reasons I get for buying gold.
If you are a trader, I can see entering the market and playing momentum to make a few ticks. However, if you are the average Joe, keep your feet out of the water. The sharks will bite, and bite hard. You are going to pay up to get into this market, and you will sell down to get out.
SPDR Gold Trust ETF Price Stock Chart by YCharts
This reminds me of a lot of markets that begin to feed on themselves. You can call it the greater fool theory, or a bubble, but when they turn, they turn HARD.
The door is considerably smaller on the way out than it was on the way in.
I haven’t bought gold ever. Haven’t sold it either. To me it’s just an indicator. Lately, if the stock market rallies and gold rallies hard, I know to start selling S&P’s ($SPY, $ES_F). Gold rallying shows me that there is a considerable amount of fear in the market. Fear doesn’t bring stock market rallies.
But I find that there are reasons to be positive about the stock market, even on banks. Banks are carrying more capital than they did in 2008. The EU is going to work out the problems it has. While the US is poised for really slow growth, most of our financial issues are not going to hit until 2015-and we will have an election that sorts them out before then. Insiders are buying stock. When executives actually put their own capital at risk in their companies, that means something. Buybacks mean nothing. Multinational corporate balance sheets are healthy.
For average Joe’s-take this opportunity to invest in a fund that replicates the S&P. In twenty years you won’t be sorry.
For the first time ever, I am looking at buying some puts in Gold. I love to fade parabolic moves and this one looks like a classic one.
This material is provided for informational purposes only, as of the date hereof, and is subject to change without notice. This material may not be suitable for all investors and is not intended to be an offer, or the solicitation of any offer, to buy or sell any securities.
For the most part he is right. I would add that investing in guns and ammo is the way to go if you think things are really going to collapse (along with water filtration, food storage etc.)
“”You can convert gold holdings to cash, but the transaction costs need to be added in to see your real return on investment.””
Jeff Carter obviously needs to join the current age and get an online broker where he can buy and sell for pennies.
Also, Carter gets the saying wrong. It goes:
“Pigs get fat and hogs get slaughtered.”
Depends: Are you talking about really holding gold in your hands or using a broker to buy shares of some form of gold related fund? If there is a total collapse, you will never see the gold unless you actually physically have it - trust me on this one.
Invest in lead and food and you can get all the gold you want later.
You can buy a futures contract and take delivery of the bullion. Transaction cost is about $10 depending upon the company.
Jeff, you're a know-nothing.
First, there's wealth preservation gold (bullion pieces and gold coins) to carry part of your wealth past the major crisis. Ounce bullion pieces, eagles, double eagles, Krugerands and other larger denomination coins fit this purpose.
Then, there's "trading gold" to use as currency during the crisis. For this period, gold is the metal of choice for large transactions, with silver being good for smaller transactions, and possibly lead/brass (ammunition) being useful at times for small transactions as well, if you have surplus ammunition and someone is willing to trade something advantageous to you for it.
For "trading gold," the best choices are 14K gold jewelry (junk necklaces, chains, rings, ear rings, etc.) Small silver bullion pieces (one troy ounce) and high silver content "junk" coins (pre 1964 US coins, for example) are aso good for "trading silver."
Lead and brass should also be in your metals inventory for TSHTF insurance. Lead and brass come in various denominations, 5.56mm, 7.62mm, 9mm, .22LR, .357mag, .45acp are all popular. That's a topic for another thread, though.
Oh, and beware Gold and Silver ETF's. Many disclose that "your investment may lose value if we buy counterfeit bullion bars." Some of these ETF's have historically been claiming to buy more bullion than current world production in several recent years. That seems impossible. Maybe one year, it could be done, but when several consecutive years show asset growth at that rate, something isn't right.
Nuff said...
Pure silver with a couple of batteries will purify water.
I think some silver eagles are worth having. Right now, one would buy almost a tank of gas. I believe we will see them as black market currency before too long, at places like flea markets and other open-air trading places.
Picky, picky, picky
You’d have to have a LOT of money to need to stockpile gold. For barter, in an Armageddon scenario, I’m sticking with more practical currency—tobacco, coffee, salt, sugar, chocolate, and whiskey. (I’m keeping the wine for myself)
The way things are moving, the average Joe may be a financial basket-case long before 20 years of his S&P money fund climbs out of the shell-hole.
Meanwhile, huge and easy fortunes have been created over the last 4 or 5 quarters by simply buying near-term call options in the dollar range at every dip in GLD--like taking candy from a baby.
Buying Puts on Gold options--even on the "parabolic curve" theory--seems like a suicide trip
I am sure you know the saying what goes up must come down. What will you do if the gold drops suddenly like a rock with out any warning. You know that could happen
Since gold dropped $70 from its high today, there are a couple of things to protect one’s gold earnings.
1. As the price goes up, sell short 10% or so of your holdings. Especially when gold is extremely overbought as it was in the past two weeks.
2. Buy puts as the price goes up.
3. If you did not do this as the price was going up, then it is still feasible to sell short a portion of your holdings.
This is one way to lock in some of your profits. It never hurts to take home a profit.
Bam! The gold holders will flock to the milk and bread producers. Who sets the value of gold when this happens?
The bulls make money
The bears make money
The pigs get slaughtered
You never go bankrupt taking a profit.
First rule in trading is trading something you know the most about.
There's a finite amount of gold but unlimited fiat currency. Governments worldwide are spending beyond their revenue. National debts are increasing exponentially. Economies are suffering and business are increasingly burdened with regulation. Volatility is to be expected.
I don't know about your calculations - mine indicate the need for gold and silver as part of a wealth preservation strategy.
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