Gyroscopic Investing

I was thinking about singing a couple of stanzas of "Deep In The Heart of Texas" or maybe shooting my gun in the air.

I will melt down several gallons and bathe in it while drinking champagne.  

amazing run...maybe trade some for gold?

Adam1226 wrote: I will melt down several gallons and bathe in it while drinking champagne.  

you must have a stash bigger than ft knox under you house! 

I plan to buy some on the next pullback.

I will light the candles on my shrine I have setup for the Hunt brothers and begin my silver $50 an ounce vigil.

read something 2nite that the inflation-adjusted high is over $100 / oz ...somehow, $50 feels like a hop, skip & jump away

Well....as of this morning $40 is here!  When I posted the "silver is due for a pullback" thread, it was at $31.  The only thing I'm doing at the moment is adding cash to the VP.  We should have some weakness or consolidation in the summer so there might be an opportunity to pick up gold or miners at a slight discount.  I'm not adding to silver until I see serious weakness or a long period of consolidation.

Trade it all for tulips, or a website with a cool name, or maybe some ethanol stock.  Better yet, nothing at all, since silver doesn't fit into my investing profile.

MediumTex wrote: I was thinking about singing a couple of stanzas of "Deep In The Heart of Texas" or maybe shooting my gun in the air.

OK, that made me laugh out loud.

I won't do anything.  About 1% or so of my total investments is in silver (10% of the VP) and I plan to keep it.  Now if it were to doubled again, then I would sell some.

I will wish I had bought silver, I suppose.

I sold off a very large position in silver in early November of last year, when the spot price was around $24.  It had gone up about 35% since I bought in, but I sold it in order to convert to the PP.  Ouch.

So apparently I can't time the markets worth a damn.  But really, that's why I decided to convert to the PP in the first place.  So in a strange way it all makes sense, and I have no regrets.

What Will You Do When Silver Hits $40 An Ounce?

threaten to melt down my wife's silverware sets...  just to see the reaction i get...

(first she said i am going to kill you... then she said wait till it hits 60) LOL

l82start wrote: What Will You Do When Silver Hits $40 An Ounce?

threaten to melt down my wife's silverware sets...  just to see the reaction i get...

(first she said i am going to kill you... then she said wait till it hits 60) LOL

might not be a long wait!

murphy_p_t wrote:

l82start wrote: What Will You Do When Silver Hits $40 An Ounce?

threaten to melt down my wife's silverware sets...  just to see the reaction i get...

(first she said i am going to kill you... then she said wait till it hits 60) LOL

might not be a long wait!

What will you do when silver hits $50 an ounce? 

I've never been very good at knowing when to say when.  I either bail way too early (anyone else sell Apple right before the iPod took off?) or wait until the bloom is off the rose (Petrobras).  Considering taking some chips off the table if we hit 50.

Pkg Man wrote: What will you do when silver hits $50 an ounce?  

I will remind any werewolf I encounter that even at $50 an ounce we can still afford plenty of silver bullets.

In wonder if silver is simultaneously benefiting from the improved economic outlook (whether right or wrong, it is better than it was six months ago) and the fear of inflation? 

I know HB said silver demand is 95% industrial, but I have a hard time squaring the meteoric rise in silver over the past months solely due to increased industrial demand.

Pkg Man wrote:

What will you do when silver hits $50 an ounce? 

I've never been very good at knowing when to say when.  I either bail way too early (anyone else sell Apple right before the iPod took off?) or wait until the bloom is off the rose (Petrobras).  Considering taking some chips off the table if we hit 50.

truth is the silverware will probably stay in one piece unless we hit a Argentina like scenario, I do have some VP bullion that I should probably have a sell number for, but i don't know what that number is, I haven't even been tempted to sell once yet in the 17 or so years i have held onto it,  right now I guess I am hoping the sell price is like pornography and "I will know it when I see it "

at this point anything I sell it for is a healthy gain so maybe leaving some money on the table wont be that hard to take, I figure if I can sell some silver and top off this years Roth contributions with pp assets I should be happy 

This silver move is pretty amazing.

Normally, anything that goes straight up results in chaotic price action when it starts to stumble.  I am thinking about the oil moves in 2008.

The next six months ought to be fascinating for silver.

MediumTex wrote: This silver move is pretty amazing.

Normally, anything that goes straight up results in chaotic price action when it starts to stumble.  I am thinking about the oil moves in 2008.

The next six months ought to be fascinating for silver.

Indeed, although I'm not as big a fan of the recent action as I should be.  I got a pretty large chunk of my VP in on silver last May, so I got lucky that I showed up for the party in time.  Just about all of my VP strategy is related to gold and mining companies, but I look at silver as a slingshot play and decided to reach for the extra juice.  Near the end of gold bull markets, silver usually performs even better.  I'm not planning on holding silver forever.  My initial target to get out was a 25-1 S/G ratio somewhere around 2013-2017.  The plan was to wait for the parabolic gold price action and ride the super silver rocket alongside before selling out completely.  I wasn't expecting to make any plans to swap out this early, but if we hit it, I'll convert every ounce of silver I have back into gold.

Not to say I won't buy back in after a steep correction, but I don't see much use for silver if we hit those ratios.  Vertical price action without periodic corrections isn't healthy.  It's always possible silver plateaus peacefully at some point, but it seems more likely that a heavy sell-off is in the cards.

hi Wonk,

Can you elaborate more on the 25:1 ratio target? The ratio has moved a long way of late as you know, but I understand the historic ratio is 16:1. Is your comment about lack of uses for silver @ that ratio relating to silver's industrial demand? I'm generally of the view that silver industrial demand is price in-elastic, even though I have little basis for the view.

BTW, I recently took some profits from silver miners and parked funds to PHYS...working out well so far. (My hands were shaking trying to hold on to the rapid rise! I'm doing my best in resisting the temptation to sell any bullion.)

Also, do you know if there are analysts/commentators/bloggers with that specific ratio target in mind? I'd be interested to review their ideas.

thx


p

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murphy_p_t wrote: hi Wonk,

Can you elaborate more on the 25:1 ratio target? The ratio has moved a long way of late as you know, but I understand the historic ratio is 16:1. Is your comment about lack of uses for silver @ that ratio relating to silver's industrial demand? I'm generally of the view that silver industrial demand is price in-elastic, even though I have little basis for the view.

The 16:1 ratio is roughly the earth's natural ratio between the two metals.  When both were used as money under a bi-metallic standard, this is the ratio used.  I can't say we'll ever see 16:1 again.  We might, but I would imagine silver would need to be officially recognized as money again.  After silver was de-monitized and the subsequent Hunt Bros story played itself out around 1980, silver had a lot of excess supply for the market to work off.  It appears we're at the point where demand is truly outstripping supply.

So, I picked 25:1 as an arbitrary number that appears to have buffer built in.  There's a good chance I would sell all of my silver at 30:1 at the end of a precious metals bull market.  We don't appear to be close to an end in the gold bull market, so I'm remaining staunch at 25:1.

What I meant by "not much use" for silver is that gold is still money.  The silver market is small and fickle.  I'd feel more confident with my holdings in gold if the ratio were, say, under 30:1.  If the ratio were 60:1 or higher, I'd feel comfortable moving value into silver during a precious metals bull market.  It really just comes down to a risk/reward assessment.  At under 30 or 25:1, I just don't feel like playing with fire.  Give me the blowtorch at 100:1 though.

As for fundamentals, I really like silver.  It's industrial uses are well documented and--quite frankly--legendary.  It is probably one of the most exciting industrial metals around.  On the investment side, I like silver during bull markets in gold because the common man can participate.  In most second and third world countries, many people find gold too expensive.  But many can afford a silver coin.  Given the inflation in the far east (especially China), I think silver remains the "backup" metal of choice for many people trying to protect their purchasing power.

murphy_p_t wrote:
Also, do you know if there are analysts/commentators/bloggers with that specific ratio target in mind? I'd be interested to review their ideas.

To my knowledge, no one has advocated exiting at 25:1.  You'll see all kinds of cases being made at 16:1 or 10:1, but I don't like the risk involved with that scenario.  I felt very confident that silver would cut the ratio in half (from 60 to 30), but beyond that the risk begins to mount.  For most people looking to leverage gold, I'd rather recommend a diverse basket of mining stocks--especially given current silver prices.

Pkg Man wrote: In wonder if silver is simultaneously benefiting from the improved economic outlook (whether right or wrong, it is better than it was six months ago) and the fear of inflation? 

I know HB said silver demand is 95% industrial, but I have a hard time squaring the meteoric rise in silver over the past months solely due to increased industrial demand.

might be a short squeeze.

notice the date on this article.

http://kingworldnews.com/kingworldnews/ ... mated.html

took some silver off table...chart is too steep...



from Wonk-
"It's always possible silver plateaus peacefully at some point, but it seems more likely that a heavy sell-off is in the cards."

not sure there's much precedent for this...

i raised some cash & lowered cost basis significantly...thinking silver may correct sharply...probably pull gold with it? i was very tempted to buy gold w/ the silver, but opted for US$