Gatesy

I love this bit: In response, the Treasury says its gold sales programme "was part of a restructuring of the foreign currency and gold reserves, aimed at achieving a better-balanced portfolio". "A reduction in risk of approximately 30% was achieved," it says.

intereting point about the leveraged funds. Clearly they don't work as people expect; however although the downside is exagerrated on the downside (not an insignificant problem, well pointed out), if you are BUYING the ETF leveraged or not one is obviously expecting it to go up, in which case your gains are still much greater than the vanilla product.

Ditto

Like toothpaste, inflation is not easy to 'get back into the tube' once it has come out.

Well said, come on people, get your orders in please....

"Bottom Fishing" certainly not necessary if you have a long term unleveraged view.

Pop Quiz: In part related to my musings over on the silver thread http://www.greenenergyinvestors.com/index....ost&p=39913 I'd be really interested to gauge what the structure of people's portfolios looks like right now, and how you might like it to look if you are in the middle of "re-structuring". You don't have to include absolute values I'm just looking for percentages. I'll start: Before: Cash 89% Equities (UK retail and credit) 11% Current: Cash 52% Physical gold and silver 11% PM Juniors 13% Gold and silver futures 8% FX deals (NOK and JPY)3% Emerging markets and divesified commodities (inc energy) 13% Soon: Cash 20% Physical gold and silver 11% PM Juniors 12% Gold and silver futures 17% Emerging markets and divesified commodities (inc energy)40%

Thanks Steve; a wealth of information as usual. Lots to think on...

In relation to my above post; maybe a form of protection would be to close profitable positions on a regular basis, suffer the (small) costs of opening new postions if I feel the opportunity is still there, and withdraw funds leaving only minimum margin on account. This way if there is a genuine significant global financial meltdown I can effectively default the contract like everyone else..

OK. I need to clarify something and I need help. In the past few months I have been making great strides to restructure my portfolio. I guess this really started back in 2005 though when I sold my B2L investment (hurrah!), but due to extensive work commitments since then I had been sitting on cash (boooo!) until a few months ago. In terms of where my cash goes now? I am distributing some into physical gold and silver (via goldmoney.com) which I would say I am 99% comfortable with (there should always be at least a healthy 1% of doubt in any investment), but I am 80% convinced that using futures to invest in gold and silver right now will generate much boosted returns. In a former life I was a Director of Finance so I am fully conversant with the obvious risks of leveraging, and as such have worked out appropriate investment values for margin purposes in order to effectively 'manage' the downside risks. ie ensuring I have far more investable cash available for margin than the minimum margins, calculated on my expectation of minimum support levels. In other words I have worked out my personal risk/reward ratios on potential contracts and it is from this (and the masses of fundamental analysis and recent technical action) that I am 80% convinced. I am not scared by the principal of leverage managed within your means (despite what JS says). The 20% uncertainty apparent from my confidence level right now though, emanates largely from these reports I read about market manipulation and significant shorting in the 'paper' silver market, and a possible derivatives crisis proposed by the likes of David Morgan. I am not clear though exactly what the expected outcome of such reports is likely to be, and who and which markets will be effected. I am interested primarily in entering futures contracts for silver and gold via ECBOT (I think this is effectively the same thing as COMEX as all exchanges are strategically linked these days) and I am doing this via an account with Etrade where I have a segregated client money account (ie. my cash, not their working capital) I suppose my unanswered questions are as follows: 1) PRICING DIVERGENCE. Because of large scale shorting/manipulation of the futures market will a significant divergence between futures(paper) prices and physical prices grow from here? 2) If the above is true surely Goldmoney's trading prices track the futures/spot exchange markets not the physical markets (although they are buying physical ). They certainly do (track futures/spot) at the moment even though there is supposed to already be a divergence between futures and physical prices (due to physical shortages). Is this support for the argument that the only uncompromised route to ownership is delivered metal? 3) I have specifically looked to Futures contracts as exchange traded derivatives with a daily clearing mechanism. In other words, even though they are derivatives they are not Over The Counter and subject to counter party risk without daily clearing of funds. Is the suggestion though that there is a risk this clearing mechanism will break down and not afford the protection I deem it to provide? I quote David Morgan "Think about the derivatives problem we are witnessing in the mortgage markets, and ask, "Can the precious metals derivatives be far behind?"" Is he referring to OTC derivatives only (brokered forwards, options etc) or Futures as well? 5) In relation to point 4, if some crisis hit the metals derivatives market which causes prices to tumble, is there any risk to me other than the daily fall in price to be experienced? I guess, thinking out loud, maybe I wouldn't be able to exit a previously bought contract by selling if the market itself was collapsing? but how would this actually be triggered? By the fact that a domino effect of collapsing financial institutions meant there were no buyers left? Yours scratching one's head....

I vote that all references to Mad Max are now replaced with references to Doomsday, a slightly different kettle of fish but a new cult classic from the creator of Dogsoldiers ! (Bob Hoskins actually refers to "pound notes" in the year 2035 (or something) so even with central London being completely cordoned off due to the lergy virus the fiat remains intact....

Ditto ! Can;t decide whether to kick myself for bottom fishing or whether to go with "the trends your friend" ! Easy saying these things in hindsight .

Seems infaltion has something to do with it......and falling equties (at last) http://bloomberg.com/apps/news?pid=2060108...&refer=home

D'OH !

Indeed. i think it has just broken out in a big break from a down channel which was in place since the drop from the March 17th high.

Anyone think the upmove in silver today is NOT a very bullish move? As far as I can see it has just broken a very important down channel. This could be it.

Or it gets nicked.

Europe and US unite on stronger dollar http://www.ft.com/cms/s/0/1f5097f2-1c6f-11...0077b07658.html This to me is about a weaker Euro rather than a stronger dollar. More loose global monetary poilcy; bring it on.

I agree. Clearly any invesment decision carries risk. The distinction between gambling and risk taking investments to me is very fuzzy. Someone who follows horse racing, say 'professionally', with a passion and is extremely knowledgable about it, and places bets based on that knowledge is defined as a gambler; but he is obviously making judgements and is including in his decision making the risks that he will not win. Is that any different to researching the case for and against gold, including the wider economic situation as best you can, and taking on the risk by investing in it? Perhaps the point is fair that if one doesn't feel they understand the case for gold sufficiently then they could indeed be classified as taking a gamble, but by that token why is the horse racing expert defined as a gambler and not an investor? I would say the biggest uncertainty affecting people's decision making in investing in gold currently is the outcome of the inflation/deflation debate, it certainly is mine; and anyone who claims to not have uncertainty in this area or any other, to me is not assessing the risks adequately; nothing but nothing is without uncertainty and risk, the trick is to make a judgement based on your expectation of how great those risks are. On this note though I believe those who are siding with gold have decided that the risk of continued inflation not occurring, whether that be a Bernanke keeling over and a Paul Volker taking over or something, is on balance worth taking, or that indeed a deflation in other sectors will not have an adverse impact on growth in the POG.

Hats off to the Ferris Bueller's Day Off nod ! Class.

I have the opposite problem; wondering when to go "all in"...

Yes, me too. I've emailed webmaster about it. Happened with the BST change at the weekend

Silver in the toilet.

Can I suggest handbags at dawn to resolve this. Sorry, couldn't resist.

Yep, very, very interesting. Can anyone fil me in briefly: 1. Who is Theodore Butler and what is his background (I take it he is not the Theodore Butler the American Impressionist Painter, 1861-1936, unless he is talking form beyond the grave) 2. What is the view on what sort of divergence could actually happen between Silver futures prices and the physcial? I'm not sure i "get" this bit. Particularly as if Silver is the industrial commodity which TB backs up his rising prices argument with, then surely the futures market (used by the industrials who need to secure raw materials at appropriate prices) will reflect any shortage of supply, particularly relating to big industrial 1000oz bars