The dollar lost about 1~2% of it's value today.
Gold shot up $17/ounce due to the weakening of the dollar, but lost a total of $1.80 from predominant selling (a net total of +$15)
And silver shot up by about 10% of it's "value" (really the dollar just go weaker compared to silver).
I would recommend waiting a few days (there will surely be a mild rebound) and then de-vesting oneself of the dollar. The value of those green sheets of paper will continue to fall drastically over the next decade.
For the average person GLD seems to be a good play on the price of gold. This is a nice play for the average person on an ETF. I tend to think that gold may be a risky play and could be quite volatile in the near term so even with the near term pressure I am out of it. This is a less risky play than the commodities market for the average investor. If one is option savy they can also make money on spread plays that take advantage of volatilty.
http://bigcharts.marketwatch.com/quickc … 9&y=11
FCX is a better play on gold. Even though it is probably more of a play on copper. It has been on a slight consolidation phase and will certainly creat another pole if metals remain high. This is a play on both gold, copper, and a good company.
http://bigcharts.marketwatch.com/quickc … 4&y=11
If some one can stomach the currency markets JPY and dollars are good combinations. I personally don't like to play the currency markets.....It is too easy to lose.
We have owned EGO since 2007 and it's up by 200%, but I wouldn't buy it now because eventually it will start to drop. The trick is to sell it before it drops by much!
EGO has been a good play. It is a little like GG which I have played. I stopped because I could not stomach the swings. The one that I am kicking myself about is SWC.
It was small and not really well proven and I also thought that the expenses like fuel would offset the price of platinum and paladium rises during a recesssion.
Boy, I was wrong and it has a monster 2 year chart.
They had a little hiccup so is it time to get in.....
Cmon Ben buy it........Well hmmmmmm
nah better not.
The gold standard was left behind years ago and thus its method of valuation to trade with it in mind. We are currently on a debt standard that the Fed has been managing for almost 100 years. Whether or not the dollar goes up or down by a couple of percentage points is an argument the money traders have to deal with while precariously balanced on the edge of the market crashing abys
I hear you Evan loud and clear, but not sure if Gold is that safe?
Everyone says that we should buy gold and silver but who do we sell it to when the bubble burst?
Perhaps Uncle Sam will bail you out and buy it at a 10% premium?
What bubble? this isn't a bubble.
The number of dollars in the world has quintupled in under 10 years.
Gold isn't increasing if VALUE, the dollar is LOSING value.
Well if you don't already own it you'd be crazy to buy it now while it's so high. Don't believe the salesmen, they want you to buy it now because they make more commission. Buying something when it's been rising steadily for several years is not wise, no matter what those who will profit from the sale tell you.
That'd be like buying a house back in 2008 - oops, lots of people did that didn't they...
That's right! Time to buy those silver and gold bars if you have any money left in the bank. If you keep it there, you can kiss those green sheets good bye!
Are you kidding? Now is a terrible time to buy gold or silver. Buy low, sell high, right? The best thing to do would be to go back in time to the weeks after the Y2K disaster didn't happen, buy them then (they were relatively cheap) and come back forward in time to now, sell them off to get something you can actually exchange for goods and services in the modern world (that's money, folks) and buy stuff.
Of course, 5 years ago the same wise people were telling you - buy real estate - you know land will never go down in value.
Evan is an honest guy. But I wouldn't trust the people selling gold as far as I could throw them. Why - if they know the dollar will be worthless - would they exchange 'secure' gold for US currency?
That's because they're trying to leverage their gold.
Say you sell up to 1000oz of gold at 1600$ for a total face value of $1,600,000 USA. You then charge 3% commision on the exchange. $1,600,000 X 1.003 = $1,604,800 USA. The $4800 USD earned in commision allows you to buy back 3 more ounces of gold. So at the end of the day, you now have 1003oz of gold instead of 1000oz just by trading. Rinse and repeat this process, and you get get even more gold. They trade gold not to get dollars, but to get more gold.
Please, excuse my horrible math, I was off a decimal point. I suffer from math suckage. They would get 30 additional ounces of gold, not 3.
This is termed pyramiding. On paper using the leverage that you have in the comodities market can allow a person to seemingly make a lot of money in the market. Heck the commodities market offers much better than 10 to 1 leverage so you can make a heck of lot right?
Don't bet on it. I will show you why.
Lets first look how the ideal position looks on paper. We will use your 1000 oz at $1600/oz example. Like you said you control $1,600,000. At a 10 to 1 leverage, you are only required to put up $160,000. So lets see what happens if it goes up 1% every day for 10 days.
Day 1 at the end of the day:1.6M +16,000 close and rebuy in the morning. You have no $176,000 to play with and you are able to buy 1.616 M worth of gold. At the end of 10 days you have 1.767M dollars worth of gold You subtract 1.6m and you have 167,000 profit. Holy smokes you more than doubled your money. I over simplified this but this is how it appears until you actually participate in the market.
The first thing that happens is sit at your computer and you see the gold price is going up and you plop down your $160,000 and boom right then the market drops 2% and you just lost $32,000 when the market makers were trying to shake you out in the morning. Well you are smart and you decide that you will cut your losses there. You liquidate your position and voila it goes back up to where it was previously and to boot it goes up another 1%. This &*"# gold is making me mad.
You go and in the morning your going to be smart and buy of the bottom. You even talk to your friend who know how to do pivots. You are going to buy when the market drops 1% and you can pick it off the bottom. It drops 1% so it hits your buy and when you buy it drops 1% but you hang on and it drops another 1%. &*#U...you cuss again It is down 3% for the day but on the next morning they walk it up another 4% so it opens another 1% higher for the day and you throw your computer out the window. After everything is said and done, it is so easy to lose your whole position.
Pyramiding looks amazing but it is very hard to make money because the markets don't perform ideally. Also at the same time it has a greedy human at the helm trying to make money which causes mistakes.
There are also the option momos. Buying way out of the money options before a company announces with expectation of 200 to 1 leverage, most always ends up with a losing every nickle invested.
Pyramiding today with analytics and many savy players is not a good idea. You know I dont think it was ever a good idea.
Yeah, sure, they're trying to leverage their commission, but the fact is that people are still buying it -- silver is up another dollar today, and the day is far from over.
And people are buying it because of fear, not because of rational thought. The time to buy precious metals isn't now, when the price is high. It was about ten years ago, when the price was low. Now is the time to sell gold, not buy it.
I was buying silver when people said not to (back when it was at $26).
I've made (well actually, I've preserved the value of my money) about $10-12 per ounce that I've bought.
(I bought a lot - even with my dad telling me not to - and that $10-12 per ounce has translated about about a 50% gain on investment!)
I just regret not buying more when it went back down to $32 last week.
Doug: good point about the "why would anyone accept a dollar for gold".
1) it's currently illegal to use gold to buy things at it's REAL value (the US does recognize gold as a currency, but only as $50 per ounce, which is clearly ludicrous. This is the application of Greshem's law)
2) Because people still accept the dollar. I'm pretty sure that most people in the US aren't thinking about the collapse of the dollar, they're merely thinking "I hope I have money for tomorrow's dinner". Thus, people who sell gold can still use the dollar to buy what they want.
Exactly. A dollar will buy you a burger at McDonalds. An ounce of gold will buy you maybe 1200 dollars at the gold exchange place. But you can't give the guy at McDonalds 1/1200 oz of gold and get a burger.
Buy an ounce of gold and you've got a lump of pretty metal that you can't use for anything practical. You can't eat it, you can't make tools out of it, you can't make phone calls on it, you can't ride it from place to place, &c. You can make pretty jewelry out of it, I suppose, or if you have the skills and the equipment, you can use it to make electronics components. but not many of us can do that.
All you can realistically do with gold is hope somebody is willing to give you more dollars for it than you paid for it.
"But you can't give the guy at McDonalds 1/1200 oz of gold and get a burger. "
This is misleading. Indeed - you can't give him a 1/1200 oz of gold BECAUSE IT'S ILLEGAL TO DO SO.
I could easily make a 1/1200 oz coin of gold (or, better yet, a 1/39th ounce of silver), but IT WOULD BE ILLEGAL TO USE IT AS MONEY AT THE MARKET RATE!!
And all the other "anti-gold" rhetoric you said in your last post applies equally well to the dollar. The only difference between gold/silver and the Dollar is that one is illegal to use at market value, and the other is not.
"All you can realistically do with gold is hope somebody is willing to give you more dollars for it than you paid for it."
--- because it's illegal to do otherwise.
Illegal, true, but also impractical. I mean, people can do illegal stuff if they want to. Some people make and sell all kinds of illegal stuff, but even they probably won't take gold in exchange for their cocaine or marijuana or crystal meth or whatever. Why not? 'Cos you can't easily exchange gold or silver for goods and services, not even other illegal ones.
The difference between precious metals and the dollar is that one can be readily exchanged for goods and services and the other cannot. When society collapses, perhaps gold and silver will become accepted media of exchange again, but my money's (heh) on something that also has other value, like whiskey or ammunition or something like that.
I guess I just don't think society is going to collapse anytime soon.
Indeed, you're listing the reason why paper money came into existence. It was once tied to real money, gold and silver.
Banks were allowed to issue receipts to claims of gold, and people just started using those. When banks illegally began inflating these receipts, bank runs took place to keep things in check.
Politicians found this ability to inflate the money supply as a valuable tool to provide for welfare and warfare expenditures, and so they basically made it illegal to perform a bank run by making the dollar untied to gold and silver.
So, the free-market found a way out of the "requiring everyone to lug around a gold coin" problem, but government then made it legal to steal wealth.
Perfect timing for my 4 week jaunt into Vietnam Cambodia and Laos where the dollar is the standby currency when you run out of local
Well, when you do not have gold, silver or dollars, you are not going to lose anything even your sleep over it. Isn't it nice being a pauper?
Just another man trying to make a dolla outta 15 cents!!!
The dollar is now worth 1/1600th of an ounce of gold; and it is worth 1/40th of an ounce of silver.
(it was 1/1550 gold and 1/38 silver when I posted)
Evan this is a bit off the subject but I have been trying to get you to look at the chart located in this thread: http://hubpages.com/forum/topic/79128 It offers proof that the CRA pulled out of lending in early 2003 as Basel 2 plans for private MBS were implemented. This proves that the shadow unregulated banks rather than the regulated CRA drove the housing bubble to dangerous places. Without the private mbs the small housing bubble would have fizzled and been contained.
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