Beating Buy and Hold (thru disciplined speculation)

[electroweak]

OK, got it. I guess I have the "luxury" of waiting it out for a better correction since I've been long silver [more gold] for a good few years. Though I don't trade core bullion, I don't count myself a "purist". Instead, not beiung a hyper-inflationist, I look to trade dollars against the volatility in silver [in order to increase dollars].... as a hedge against that core position. If I don't see the mid 20s, no harm done...most investors are happy with a non-performing hedge.

 

Just a reminder: Sold out of your non-core position at $17, iirc.. I sold out of my trading position between $30-$48 with about 60% of that happening between $47-48. I am watching this with interest. The fundamentals for silver are still very good, and of course i still have my Kg bars and coins. I have a lot more gold now than i had

 

Including some fetish items e.g.:

[drbubb]

Note: I will add the Argentex (ATX.v) shares, when placement is confirmed*.

Without that, my AP#1 is only 90,000 shares long SLV (thru Calls), and I am less exposed to the upside in Silver than the B&H portfolio. I will add in an Argentex position costing approx. 10,000 SLV - ie about $370k, at $1.15 per ATX shares that is: 321,000 shares - I will use 300,000. I would hope to see this position outperform 10,000 shares in SLV.

 

== ==

*If ATX.v falls to $1.10 or lower, I may buy shares in the market rather than taking up PP shares at $1.15. In fact, I have already bought some ATX shares at $1.05.

I bought the ATX shares at $1.10 and will put them into the portfolio, but in a slightly smaller size. ATX closed at $1.10 on Friday, and during the day touched $1.07, very near the 144d. MA.

[drbubb]

PORTFOLIO UPDATE - now at 1/10th the former size (more "manage-able", and more credible?)

xxxxxxxxxxxxxxxxxx

 

UPDATE: Tuesday Close: 31 May:

(Prices: Silver: $38.48 / SLV: $37.60 / DXY: $74.50 / CRB: $350.06 )

 

====== : B&H Portf. : Alt.Port #1 : Alt.Port #2 :

SLV$37.60

Cash--- : - - - - -- $ 0 : - $432.7 K : - $359.1 K :

Silver.oz : --- 10,000 : --- 00,000 : --- 000,000 :

SLV .oz : ---- 00,000 : --- 00,000 : --- 020,000 :

Value- : -- $384.8 K : - $ 000.0 K : - $075.2 K :

Opt.Oz+/---- 00,000 : ----- 9,000 : ----- 8,000 : calls

Opt.Oz -/---- 00,000 : ----- 2,000 : ----- 2,000 : puts

Note --- : --- - None - :op.B1,e1f1 :op.B2d2,e2f2 :

Opt.Val : --- - None - : - $ 91.1 K : - $ 82.0 K :

===== : ===========================

TotValue: -- $ 384.8 K : - $523.8K : - $516.3 K :

Vs B&H: --- 100.0% - : -- 136.1% : -- 134.2% :

======

SLV port.#2 - bot at $32.44/ 2,000 x $37.60 cls. = $75.2k

Options:

B1/ jul. $29c - bot at $6.35 / 5,000 x $8.40close = $42.0k

E1/ jan $27c - bot at $8.00 / 4,000 x $11.67close = $46.7k

F1/ jun $37p - bot at $3.35 / 2,000 x $1.20close = $ 2.4k

===

B2/ jul. $30c - bot at $7.25 / 2,000 x $7.80close = $15.6k

D2/ oct.$30c - bot at $6.50 / 2,000 x $8.65close = $17.3k

E2/ jan $27c - bot at $7.70 / 4,000 x $11.67close = $46.7k

F2/ jun $37p - bot at $3.35 / 2,000 x $1.20close = $ 2.4k

 

RECORD

======

Record : B&H Portf. : Alt.Port #1 : Alt.Port #2 : Average : -Ratio- : -SLV- : -DXY- /--CRB-- real.SLV

28 Apr.: --- $480.0 K : - $480.0K : - $480.0 K : $480.0K : 100.0% : $47.26 x73.12 / 3.7056 =# 9.326

06 May: --- $355.0 K : - $479.9K : - $480.0 K : $479.9K : 135.2% : $34.48 x74.84 / 3.3735 =# 7.650

13 May: --- $353.6 K : - $491.6K : - $480.2 K : $485.9K : 137.4% : $34.39 x75.71 / 3.3853 =# 7.692

20 May: --- $350.3 K : - $495.3K : - $486.2 K : $490.8K : 140.1% : $34.18 x75.66 / 3.4156 =# 7.571

27 May.est $380.0 K : - $518.0K : - $511.0 K : $514.5K : 135.4% : $37.03 x74.76 / 3.4627 =# 7.995

31 May: --- $384.8 K : - $523.8K : - $516.3 K : $520.0K : 135.1% : $37.60 x74.50 / 3.5006 =# 8.002

[romans holiday]

Just a reminder: Sold out of your non-core position at $17, iirc.. I sold out of my trading position between $30-$48 with about 60% of that happening between $47-48. I am watching this with interest. The fundamentals for silver are still very good, and of course i still have my Kg bars and coins. I have a lot more gold now than i had

 

 

No, I should be reminding you. Early on I decided to move my core from silver to gold. I then retained a smaller non-core trading position in silver to trade against dollars . This was [and is] a peripheral/ hedging trade, where the aim is not to risk dollars, but to gain them. Selling this trading position at 17.90 only meant I missed a good trade, but this doesn't have anything to do with my core investment in gold [and physical silver].

 

Swapping from core silver to core gold earlier involved minimizing risk... I may have been able to better maximize profit by swapping at a more favorable ratio.... but my core in gold has still performed well. My strategy is to play it more defensively, which I feel I can afford to do by having put over 50% of my worth into bullion at an early date. I expect a good chance of making a great gain in further silver volatility.

 

My strategy remains the same. I'm looking to buy silver with a large part of my dollar hedge at/ near the bottom.... to sell on a spike in order to increase the dollar hedge against my core in gold/ silver. With the aim to increase the dollar hedge, it doesn't really matter whether I buy silver at the lowest price [or a higher price than when I sold].... what matters is to buy on a dip, and then sell on a high. What also matters is to minimize risk to that dollar hedge... hence the selling at 17.90 when the silver market was less clear than now. Silver volatility will no doubt continue to surprise all... both to the upside and the downside.

 

Ideally, I'd like to buy silver at the mid-20 mark, sit on it for a couple of years, and sell for US dollars on a spike to near 100. This would balance out a currency portfolio split between bullion and US dollars, where the increase in dollars would have matched the long term increase in [gold] bullion. It would also be a much better hedged position than being solely in either bullion or dollars.

 

Well done on your trade of silver to gold.

[drbubb]

UPDATE: Friday Close: 3 June :

(Silver: $36.19 / SLV: $35.34 / DXY: $73.73 / CRB: $348.61)

 

====== : B&H Portf. : Alt.Port #1 : Alt.Port #2 :

SLV$35.34

Cash--- : - - - - -- $ 0 : - $410.7 K : - $337.1 K :

Silver.oz : --- 10,000 : --- 00,000 : --- 000,000 :

SLV .oz : ---- 00,000 : --- 00,000 : --- 002,000 :

Value- : -- $353.4 K : - $ 000.0 K : - $070.7 K :

Opt.Oz+/---- 00,000 : ----- 9,000 : ----- 8,000 : calls

Opt.Oz -/---- 00,000 : ----- 2,000 : ----- 2,000 : puts

Note --- : --- - None - :op.B1,e1f1 :op.B2d2,e2f2 :

Opt.Val : --- - None - : - $ 76.3 K : - $ 68.1 K :

Eqy.Val : --- - None - : - $ 22.0 K : - $ 22.0 K :

===== : ===========================

TotValue: --- $361.9K : - $509.0K : - $497.9 K :

Vs B&H: -- 100.0% - : -- 144.0% : -- 140.9% :

======

SLV port.#2 - bot at $32.44/ 2,000 x $35.34 cls. = $70.7k

Options:

B1/ jul. $29c - bot at $6.35 / 5,000 x $6.70close = $33.5k

E1/ jan $27c - bot at $8.00 / 4,000 x $9.72close = $38.9k

F1/ jun $37p - bot at $3.35 / 2,000 x $1.95close = $ 3.9k

===

B2/ jul. $30c - bot at $7.25 / 2,000 x $5.82close = $11.6k

D2/ oct.$30c - bot at $6.50 / 2,000 x $6.87close = $13.7k

E2/ jan $27c - bot at $7.70 / 4,000 x $9.72close = $38.9k

F2/ jun $37p - bot at $3.35 / 2,000 x $1.95close = $ 3.9k

Equities:

ATV/argentex - bot at $1.10/ 20,000x $1.10close = $22.0k

 

RECORD

======

Record : B&H Portf. : Alt.Port #1 : Alt.Port #2 : Average : -Ratio- : -SLV- : -DXY- /--CRB-- real.SLV

my 2010 --- $182.1 K : ======= : ====== : ====== : ====== :: $18.21 x86.04 / 2.5852 =# 6.061

ye 2010: --- $301.8 K : ======= : ====== : ====== : ====== :: $30.18 x78.96 / 3.3280 =# 7.160

28 Apr.: --- $480.0 K : - $480.0K : - $480.0 K : $480.0K : 100.0% : $47.26 x73.12 / 3.7056 =# 9.326

06 May: --- $355.0 K : - $479.9K : - $480.0 K : $479.9K : 135.2% : $34.48 x74.84 / 3.3735 =# 7.650

13 May: --- $353.6 K : - $491.6K : - $480.2 K : $485.9K : 137.4% : $34.39 x75.71 / 3.3853 =# 7.692

20 May: --- $350.3 K : - $495.3K : - $486.2 K : $490.8K : 140.1% : $34.18 x75.66 / 3.4156 =# 7.571

27 May.est $380.0 K : - $518.0K : - $511.0 K : $514.5K : 135.4% : $37.03 x74.76 / 3.4627 =# 7.995

31 May: --- $384.8 K : - $523.8K : - $516.3 K : $520.0K : 135.1% : $37.60 x74.50 / 3.5006 =# 8.002

03 Jun.: --- $361.9 K : - $509.0K : - $497.9 K : $503.4K : 139.1% : $35.34 x73.73 / 3.4861 =# 7.474

Vs B&H: -- 100.0% - : -- 140.6% : -- 137.6% :

 

== ==

 

Note:

On Friday's close the AP Portfolios are at 142.4%, the best outperformance yet!

(in Edit): later revised to 139.1%, after I used the Silver price of $36.19 for the B&H portfolio

[electroweak]

No, I should be reminding you. Early on I decided to move my core from silver to gold. I then retained a smaller non-core trading position in silver to trade against dollars . This was [and is] a peripheral/ hedging trade, where the aim is not to risk dollars, but to gain them. Selling this trading position at 17.90 only meant I missed a good trade, but this doesn't have anything to do with my core investment in gold [and physical silver].

 

Swapping from core silver to core gold earlier involved minimizing risk... I may have been able to better maximize profit by swapping at a more favorable ratio.... but my core in gold has still performed well. My strategy is to play it more defensively, which I feel I can afford to do by having put over 50% of my worth into bullion at an early date. I expect a good chance of making a great gain in further silver volatility.

 

My strategy remains the same. I'm looking to buy silver with a large part of my dollar hedge at/ near the bottom.... to sell on a spike in order to increase the dollar hedge against my core in gold/ silver. With the aim to increase the dollar hedge, it doesn't really matter whether I buy silver at the lowest price [or a higher price than when I sold].... what matters is to buy on a dip, and then sell on a high. What also matters is to minimize risk to that dollar hedge... hence the selling at 17.90 when the silver market was less clear than now. Silver volatility will no doubt continue to surprise all... both to the upside and the downside.

 

Ideally, I'd like to buy silver at the mid-20 mark, sit on it for a couple of years, and sell for US dollars on a spike to near 100. This would balance out a currency portfolio split between bullion and US dollars, where the increase in dollars would have matched the long term increase in [gold] bullion. It would also be a much better hedged position than being solely in either bullion or dollars.

 

Well done on your trade of silver to gold.

Thanks for the reminder; so you swapped a core postion of Silver to gold early on (<$17), and then sold the trading position at $17.90, if i have that right.

 

My strategy remains the same. I'm looking to buy silver with a large part of my dollar hedge at/ near the bottom.... to sell on a spike in order to increase the dollar hedge against my core in gold/ silver.

 

Pity you missed the bottom (Nov 2008) and (now obvious) spike though, eh? My feeling was always that something like that would happen and I am still placed very nicely if there is a rush back into silver. Sticking broadly to my trading plan helped loads; but i did break the rules a bit the weekend silver tanked - I just had a feeling it was all going to go to hell for a while and so got out of my electronic position altogether for gold.

 

Now I am more worried about gold doing the same blow-off; where i do not have a real 'trading position';- Gold is all core for me. I will be selling physical ounces eventually but not till >$5000 in today's money, and what for - who knows. Maybe some cheap stocks or property (taxable, confiscatable, immovable, still lots of downside there..)

 

Your proposed silver trade of mid-20's to 100 would give you a 4-bagger. If you had bought in 2008 (~$10) and held till 2011 (~$48) you would also have made that kind of profit. I think you need to ask why you didn't capitalise on that move and see what might go wrong with a 20-100 move. Just thinking that's all...Not meaning this to sound personal.

[leviathan]

I'm interested in why your target for silver is in the US$20's around US$26. I would have thought the 144 day moving average might hold and provide support around thbe US$33 level? 144 day average seems to have consistently held for gold since the 08 crash would it not also hold for silver?

[drbubb]

I'm interested in why your target for silver is in the US$20's around US$26. I would have thought the 144 day moving average might hold and provide support around thbe US$33 level? 144 day average seems to have consistently held for gold since the 08 crash would it not also hold for silver?

Certain patterns complete at $26.

 

But I will add to my longs, using options probably, if SLV hits $33 or less.

 

I will be ready to add more if the 144d MA is broken and a deeper correction is signalled

[romans holiday]

Thanks for the reminder; so you swapped a core postion of Silver to gold early on (<$17), and then sold the trading position at $17.90, if i have that right.

That's basically about it... though I did also retain physical bars of silver from early on [that's the beauty of physical... hard to sell]. But silver still only makes up about 10% of the bullion core.

 

Pity you missed the bottom (Nov 2008) and (now obvious) spike though, eh? My feeling was always that something like that would happen and I am still placed very nicely if there is a rush back into silver. Sticking broadly to my trading plan helped loads; but i did break the rules a bit the weekend silver tanked - I just had a feeling it was all going to go to hell for a while and so got out of my electronic position altogether for gold.

Well, I was buying silver very heavily when it was around 12/ 13, so there were still gains made there. But of course not the 4 baggers you mention.....re-positioning myself has involved missing a good trading opportunity. But I reckon we'll see another, and I'll be in a better position to take advantage of it [i'm only looking for the one single trade].

 

The idea being to near completely demarcate the two in my mind.... in order to trade silver volatility as a hedge against the large core gold position.....

 

Now I am more worried about gold doing the same blow-off; where i do not have a real 'trading position';- Gold is all core for me. I will be selling physical ounces eventually but not till >$5000 in today's money, and what for - who knows. Maybe some cheap stocks or property (taxable, confiscatable, immovable, still lots of downside there..)

.... which now means I have much less concern about core gold. I'd welcome a down-draft in bullion prices so I could trade silver [in order to gain dollars of course]. I think CB recognition of gold as a monetary asset will keep the price a lot more stable than silver.

 

Your proposed silver trade of mid-20's to 100 would give you a 4-bagger. If you had bought in 2008 (~$10) and held till 2011 (~$48) you would also have made that kind of profit. I think you need to ask why you didn't capitalise on that move and see what might go wrong with a 20-100 move. Just thinking that's all...Not meaning this to sound personal.

As a mentioned, the move from heavy silver to heavy gold was a defensive move. Back then the picture was not so clear [benefit of hindsight and all that]. But now the picture is clearer. I was right about the massive volatility, was more just a case of positioning myself.... and now getting on the right side of that volatility.

 

If I'd stayed in silver [rather than gold], I'd probably have bailed at 30/ 28 anyway... I good profit, but the cost would have also involved no small amount of anxiety and strain, and a tense time of it. For me, it's more than about attempting to maximize profit, under a large amount of stress. I want to find the easiest and most "leisurely" trade possible.... which is why I trade very rarely.

 

If I manage to buy, a relatively large position, in the mid-20s and sell at near 100, and use an instrument such as AGQ [double long ETF], this would represent a near 10 bagger... and keeping up with gains in core bullion [gold price], would nicely counter-balance it. If the trade is a success, it will go straight into a real asset such as productive property.

[Pixel8r]

in order to trade silver volatility as a hedge against the large core gold position.....

Doesn't trading silver even as a hedge mean that it should be bought when cheap and sold when high? As far as I can see you have traded in the wrong way and have reduced the amount of your precious hedge dollars (an oxymoron if ever I have heard one).

 

I think you need to stop talking about how you are trading silver as a hedge, selling at $17 and then watching it go to $49.50 is a massive fail. You should start talking about how you are trading it when you have done it successfully rather than when you have missed the boat.

 

 

I swapped a load of gold to silver at 72 on the ratio and then back to gold at around 37, so really doubled my gold in the deal. That is using the silver volatility in a way that is a good trade. Selling silver for dollars and then watching the dollars lose strength while silver escalates is a bad move and you shouldn't keep trying to make out it was a wise strategy.

[romans holiday]

Doesn't trading silver even as a hedge mean that it should be bought when cheap and sold when high? As far as I can see you have traded in the wrong way and have reduced the amount of your precious hedge dollars (an oxymoron if ever I have heard one).

I have not traded in the wrong way, and have not reduced my dollar hedge [lost dollars] by selling silver. Why do you think I've reduced US dollars by selling silver? All that's happened is I've missed an opportunity to trade and increase the dollar hedge by going to the the sidelines... with this particular trading position. No dollars have been lost.

 

I think what's going on here is a confusion between the momentary paper price of something, in US dollars, and the owning of US dollars themselves. That the silver price is presently higher does not signify the loss of dollars. Only those that chased silver up, and buying on the spike, would have done that. But then they would only have reduced/ lost dollars [as opposed to merely a "paper" loss] if they got out at a loss.

 

As mentioned, the aim of trading silver volatility is to increase the dollar hedge, not silver ounces [I'm quite content with the amount of bullion I already have]. There should be another good opportunity to trade the volatility. Now that silver has "shown itself", the trade should be easier to make with the dollar hedge.

 

Though I've not "maximized profit"... on paper at the present [and who really does that], the hedging strategy means I can minimize stress [and there is value in that].... too much emotion rides on silver... up and down. Still, am happy with the decent paper profits that have been made by being long in a core of gold/ silver.... and also happy to have been "proved wrong", for the time being, on my hedging trade on silver volatility.... where I deliberately wear my bear hat. No certainties, and all that.

 

I still think the sought after trade on silver volatility will pay off at some point because I think silver volatility will remain to both sides, and I don't think the dollar will blow up.

[BradleyWong]

RECORD

======

Record : B&H Portf. : Alt.Port #1 : Alt.Port #2 : Average : -Ratio- : -SLV- : -DXY- /--CRB-- real.SLV

my 2010 --- $182.1 K : ======= : ====== : ====== : ====== : $18.21 x86.04 / 2.5852 =# 6.061

ye 2010: --- $301.8 K : ======= : ====== : ====== : ====== : $30.18 x78.96 / 3.3280 =# 7.160

28 Apr.: --- $480.0 K : - $480.0K : - $480.0 K : $480.0K : 100.0% : $47.26 x73.12 / 3.7056 =# 9.326

06 May: --- $355.0 K : - $479.9K : - $480.0 K : $479.9K : 135.2% : $34.48 x74.84 / 3.3735 =# 7.650

13 May: --- $353.6 K : - $491.6K : - $480.2 K : $485.9K : 137.4% : $34.39 x75.71 / 3.3853 =# 7.692

20 May: --- $350.3 K : - $495.3K : - $486.2 K : $490.8K : 140.1% : $34.18 x75.66 / 3.4156 =# 7.571

27 May.est $380.0 K : - $518.0K : - $511.0 K : $514.5K : 135.4% : $37.03 x74.76 / 3.4627 =# 7.995

31 May: --- $384.8 K : - $523.8K : - $516.3 K : $520.0K : 135.1% : $37.60 x74.50 / 3.5006 =# 8.002

02 Jun.: --- $353.4 K : - $509.0K : - $497.9 K : $503.4K : 142.4% : $35.34 x73.73 / 3.4861 =# 7.474

Vs B&H: -- 100.0% - : -- 144.0% : -- 140.9% :

 

What does that last column mean - "real.SLV"?

 

Do you have some new way of valuing Silver ?

[drbubb]

What does that last column mean - "real.SLV"?

Do you have some new way of valuing Silver ?

I should have "quotes" around that measure: real.SLV

 

It is the product of a formula:

 

+ SLV - the etf for Silver (the starting point)

x DXY - the trade-weighted dollar

/ CRB - CRB Index etf

 

The idea is:

+ I am willing to pay more for silver if the Dollar drops, so I adjust the price for the trade-weighted dollar

+ I am willing to pay more for silver if the CRB rises, so I divide it by the CRB

 

I will monitor the resulting "real SLV" measure and see if something below 7, near 6, even lower than that, provides a buying opportuntity

 

HISTORICALLY:

Record : B&H Portf. : Alt.Port #1 : Alt.Port #2 : Average : -Ratio- : -SLV- : -DXY- /--CRB-- real.SLV

ye 2008: --- $112.0 K : ======= : ====== : ====== : ====== : $11.20 x82.12 / 2.30est=# 3.999

my 2009 --- $182.1 K : ======= : ====== : ====== : ====== : $18.21 x86.04 / 2.50est=# 6.267

ye 2009: --- $301.8 K : ======= : ====== : ====== : ====== : $16.54 x77.02 / 2.8338 =# 4.495

my 2010 --- $182.1 K : ======= : ====== : ====== : ====== : $18.21 x86.04 / 2.5852 =# 6.061

ye 2010: --- $301.8 K : ======= : ====== : ====== : ====== : $30.18 x78.96 / 3.3280 =# 7.160

28 Apr.: --- $480.0 K : - $480.0K : - $480.0 K : $480.0K : 100.0% : $47.26 x73.12 / 3.7056 =# 9.32

 

Here's a Ratio that is easier to chart, and shows a similar relationship:

 

Silver-to-CRB Ratio ... update

 

 

It shows a rather clear cycle, which should bottom again in about one month's time.

The cycle has been reliable, over 6 repetitions, except one, where it inverted.

If the cycle repeats, the Ratio may bottom next month near 9.5 (between 9.0 - 10.0)

[Pixel8r]

I should have "quotes" around that measure: real.SLV

You are right there implying SLV is real silver is a bad move, as this graph below shows. SLV doesn't perform as well as real silver.

 

 

 

[drbubb]

You are right there implying SLV is real silver is a bad move, as this graph below shows. SLV doesn't perform as well as real silver.

 

Pix.,

You puzzle me.

You worry about losing 2% over 2 years, and not 30%+ over two weeks while Silver corrects.

There is something inconsistent in that.

[Pixel8r]

Pix.,

You puzzle me.

You worry about losing 2% over 2 years, and not 30%+ over two weeks while Silver corrects.

There is something inconsistent in that.

That is because you are thinking as a trader and not a buy and holder. I bought most of my silver in 2008 and have held most of it since, currently am up around 200% on all my silver.

 

I am not concerned with the fact that it has dropped 30% in 2 weeks as I don't plan on selling it, I plan on keeping it for another couple of years. If I had held SLV for 5 years and lost 2% per year that would mean that it was worth 10.4% less than physical silver. Also what is to say that the amount SLV loses over real silver doesn't escalate as time goes on.

 

 

That is also not factoring in the fact that the SLV may break when the final surge in silver happens, if that happened you would be paid fiat cash at a certain fix while the price of physical continued to surge.

 

Does that explain my thinking?

[drbubb]

That is because you are thinking as a trader and not a buy and holder. I bought most of my silver in 2008 and have held most of it since, currently am up around 200% on all my silver.

 

I am not concerned with the fact that it has dropped 30% in 2 weeks as I don't plan on selling it, I plan on keeping it for another couple of years. If I had held SLV for 5 years and lost 2% per year that would mean that it was worth 10.4% less than physical silver. Also what is to say that the amount SLV loses over real silver doesn't escalate as time goes on.

 

 

That is also not factoring in the fact that the SLV may break when the final surge in silver happens, if that happened you would be paid fiat cash at a certain fix while the price of physical continued to surge.

 

Does that explain my thinking?

I think it is down 2% over two years.

What do you pay for storage thru Gold Money?

 

I think you will see me switching into a significant physical Silver holding at some stage.

Right now, I prefer the SLV and its flexible options (which are easy to price & monitor here!)

[romans holiday]

1] "To hold, or not to hold?" Why the polarity? The question is posed wrongly because it suggests there must be two mutually exclusive positions.

 

2] A more practical question is "How much to hold, and much much to trade to increase?" I believe, Dave Morgan approaches it along these "non-purist" lines.... he trades with the goal of increasing silver ounces.

 

Yet even this is limited because one is going to be "100% in" most of the time. If you are 100% certain [and can see the future], then no problem, but if you're more pragmatic and recognize the possibility of being wrong then a more nuanced approach is required.

 

3] How about this for a novel idea.... "How much to hold, and how much to trade to hedge the holding?"

 

Of course a contary currency is required, and the jettison of the 100% certain hyper-inflation idea.

 

But then, with the reverse liquidity triangle [liquidity preference] in mind, the hedge has the potential to become more than a simple hedge [though it doesn't have to]; it may relatively win out as the second strongest currency. Note, that if both bullion and dollars end up being the preferred currencies then a solid dollar hedging position becomes more than a contrasting straight-out hedge, but a complementary "investment"..... and where those complementary investments are contrasted significantly in times of volatility making for a good and relatively safe trade [in silver].

 

Silver volatility can [ideally] be used to increase the dollar "hedge". If this is timed right, the potential is there for the monetary value of your [traded] hedge to keep pace with increases in core bullion.

 

In the 3rd approach, you need to be in two minds towards silver. Yes, it will perform well, and it can be part of your core bullion [though preference/ primacy is given to gold]. Yet, it will remain volatile against the dollar, hence can also be traded against the dollar "hedge" in order to increase that hedge.

 

[drbubb]

3] How about this for a novel idea.... "How much to hold, and how much to trade to hedge the holding?"

 

Of course a contary currency is required, and the jettison of the 100% certain hyper-inflation idea.

I agree with that concept, but maybe apply it differently.

 

One reason I am monitoring this last column ("real SLV"*) is it may help tell me when Silver is overvalued:

 

HISTORICALLY:

Record : B&H Portf. : Alt.Port #1 : Alt.Port #2 : Average : -Ratio- : -SLV- : -DXY- /--CRB-- real.SLV

ye 2008: --- $112.0 K : ======= : ====== : ====== : ====== : $11.20 x82.12 / 2.30est=# 3.999

my 2009 --- $182.1 K : ======= : ====== : ====== : ====== : $18.21 x86.04 / 2.50est=# 6.267

ye 2009: --- $301.8 K : ======= : ====== : ====== : ====== : $16.54 x77.02 / 2.8338 =# 4.495

my 2010 --- $182.1 K : ======= : ====== : ====== : ====== : $18.21 x86.04 / 2.5852 =# 6.061

ye 2010: --- $301.8 K : ======= : ====== : ====== : ====== : $30.18 x78.96 / 3.3280 =# 7.160

28 Apr.: --- $480.0 K : - $480.0K : - $480.0 K : $480.0K : 100.0% : $47.26 x73.12 / 3.7056 =# 9.32

 

At 9:1, there were better things to switch to: Gold, Oil, or even the CRB etf.

But since that peak, it has fallen, and as this measure approaches 7:1, buying Silver becomes more interesting again.

 

Record : B&H Portf. : Alt.Port #1 : Alt.Port #2 : Average : -Ratio- : -SLV- : -DXY- /--CRB-- real.SLV

31 May: --- $384.8 K : - $523.8K : - $516.3 K : $520.0K : 135.1% : $37.60 x74.50 / 3.5006 =# 8.002

02 Jun.: --- $353.4 K : - $509.0K : - $497.9 K : $503.4K : 142.4% : $35.34 x73.73 / 3.4861 =# 7.474

== == ==

 

*"Real SLV", that's:

SLV x Traded-weighted dollar (DXY) / divided by the CRB etf (CRB)

[romans holiday]

I agree with that concept, but maybe apply it differently.

....

At 9:1, there were better things to switch to: Gold, Oil, or even the CRB etf.

But since that peak, it has fallen, and as this measure approaches 7:1, buying Silver becomes more interesting again.

 

....

*"Real SLV", that's:

SLV x Traded-weighted dollar (DXY) / divided by the CRB etf (CRB)

I wonder at what ratio silver would have "over-corrected". Could another down-leg take that ratio down to 6:1.. or even 5:1? [do fundamentals take a back seat in unstable markets?]

 

Another must watch ratio has to be gold/ silver. At 42:1, this ratio is still very low..... A spike to 60:1?

 

With one foot in the "buy and hold camp", I'm more confident of temporarily putting both feet in having seen silver spike to near 50.... but in no hurry to buy. If I miss the trade, no harm done, due to a solid core in bullion. If I get the trade right, the dollar hedge/ silver trade could buy that productive property for me... instead of core bullion. The desire to get a foot back out [and into property] should also resolve the "exit dilemma", where many wonder where and how to exit bullion.

 

I reckon the recent spike points the way ahead for silver... though it may take a couple more years to reach it [and hold it] again.

 

 

[drbubb]

I wonder at what ratio silver would have "over-corrected".

Could another down-leg take that ratio down to 6:1.. or even 5:1? [do fundamentals take a back seat in unstable markets?]

I don't have a crystal ball - But I do have my cycles.

 

 

And they suggest buying in about a month's time. So if a Low lines up with that timeframe, and Ratio looks attractive then, I shall probably load up - using physicals, SLV shares, and SLV calls

[Pixel8r]

I think it is down 2% over two years.

What do you pay for storage thru Gold Money?

 

I think you will see me switching into a significant physical Silver holding at some stage.

Right now, I prefer the SLV and its flexible options (which are easy to price & monitor here!)

Just be careful that you don't wait too long.

 

There will come a time when everyone wants to buy physical metal but can't, which will also be the time that SLV fails. I think that will happen all of a sudden and there will be a mad rush into physical and why it will become impossible to buy.

 

 

[drbubb]

Just be careful that you don't wait too long.

 

There will come a time when everyone wants to buy physical metal but can't, which will also be the time that SLV fails. I think that will happen all of a sudden and there will be a mad rush into physical and why it will become impossible to buy.

I am sure that is well meant.

 

And it may or may not happen in the next several months.

 

I do believe that most of the Silver Bulls will be surprised that such a day has taken so long to arrive.

[Pixel8r]

I am sure that is well meant.

 

And it may or may not happen in the next several months.

 

I do believe that most of the Silver Bulls will be surprised that such a day has taken so long to arrive.

I am happy for it to take as long as it needs to take. Simply buying and holding physical metal has returned an amazing amount, requires little doing other than monitoring the general economy. Each day that goes by things continue to get worse and will lead to the price going higher in the end IMO. I am not at all surprised that it has taken as long as it has, I expect to make over 100% on my silver over the next year which will do my just fine. Do you think silver will be over $74 by June 2012?

 

I think that the central banks will continue not to accept the pain that needs to come and that just keeps making the pain to come greater. They are hopelessly trying to find a way out of this and all the time they are adding more fuel to the gold and silver rockets.

 

With my business I will be able to see when things are finally turning around, as it does seem to be very sensitive to the economic outlook. Currently I am quiet at work but have been reasonably busy over the last 6 months, while the QE2 cash was flowing It will be interesting to see what happens when we get QE3. You will notice that said when not if, as I don't think there is any chance that western CB's will suddenly grow a pair and accept the massive amount of pain they have created. We are currently in the eye of the storm, everything appears calm but the winds are ripping around us.

 

 

[drbubb]

Updated spreedsheet (using Google) for "Beating Buy&Hold" :

Shortcut link: http://tinyurl.com/BandH-wk

Original : https://spreadsheets1.google.com/spreadsheet/pub?hl=en_US&hl=en_US&key=0Am5S2YdB2ZxYdC1KcWgxVVpqamJhQl9zRmt2aEhPaUE&single=true&gid=0&output=html

 

RECORD

======

Record : B&H Portf. : Alt.Port #1 : Alt.Port #2 : Average : -Ratio- : -SLV- : -DXY- /--CRB-- real.SLV

my 2010 --- $182.1 K : ======= : ====== : ====== : ====== :: $18.21 x86.04 / 2.5852 =# 6.061

ye 2010: --- $301.8 K : ======= : ====== : ====== : ====== :: $30.18 x78.96 / 3.3280 =# 7.160

28 Apr.: --- $480.0 K : - $480.0K : - $480.0 K : $480.0K : 100.0% : $47.26 x73.12 / 3.7056 =# 9.326Note

06 May: --- $355.0 K : - $479.9K : - $480.0 K : $479.9K : 135.2% : $34.48 x74.84 / 3.3735 =# 7.650

13 May: --- $353.6 K : - $491.6K : - $480.2 K : $485.9K : 137.4% : $34.39 x75.71 / 3.3853 =# 7.692

20 May: --- $350.3 K : - $495.3K : - $486.2 K : $490.8K : 140.1% : $34.18 x75.66 / 3.4156 =# 7.571

27 May.est $380.0 K : - $518.0K : - $511.0 K : $514.5K : 135.4% : $37.03 x74.76 / 3.4627 =# 7.995

31 May: --- $384.8 K : - $523.8K : - $516.3 K : $520.0K : 135.1% : $37.60 x74.50 / 3.5006 =# 8.002

03 Jun.: --- $361.9 K : - $509.0K : - $497.9 K : $503.4K : 139.1% : $35.34 x73.73 / 3.4861 =# 7.474

10 Jun.: --- $362.0 K : - $504.0K : - $493.4 K : $498.7K : 137.8% : $35.25 x74.83 / 3.4804 =# 7.579

Vs B&H: -- 100.0% - : -- 139.2% : -- 136.3% :