Beating Buy and Hold (thru disciplined speculation)

[G0ldfinger]

GF,

What is this chart meant to show?

The chart shows:

 

(1)

gold price / (fed.ext.debt / US gold holdings)

=

value of US gold holdings / fed.ext.debt

= [because of (2) below]

gold price / fed.ext.debt.equ.price of gold.

 

 

The ratio

 

(2)

fed.ext.debt.equ.price of gold = fed.ext.debt / US gold holdings

 

is Sinclair's favourite gold price model. He thinks that the ratio (1) needs to go back to 1.0 every now and then to balance the US debt in terms of gold (there is the "mean reversion" part). He traded out at almost double that in 1980 (at over 1.8 to be precise). But that's why he closed his clients' accounts out at $400, because there the ratio (1) was just over 1.0.

 

I think this is one of the better gold price models, but I see the alternatives. Still, it is better than saying "it's just a commodity!"

[Icarus]

The Silver Bulls caught the scent and have taken early flight.

 

I will toss in some cheap call Bids for the opening- This is a good sort of market to start building those long term call positions, using cash realised near $50

 

Yes, buying highly leveraged over the counter derivatives from insolvent banks does seem to be a good idea. The risk of banks going bust and you losing all your money is negligable, as all loses are bailed out by the taxpayer. If you ask me you should do what is best for yourself. If there is a way to screw some cash out of the system, may as well do it. Don't pretend this is somehow an ethical investment, though. It is not. Bailing out banks is costing ordinary people huge amounts of money. A lot of people are seeing their standard of living smashed to pieces to bail out banks and keep your 'investment' safe.

 

At first glance trading appears to be quite technical and scientific. It is not. The jargon used by traders can take a while to learn. The modus operandi of a specific market or exchange may take a little research. Perhaps you would need to read a book. But once these basics are understood and you come to the real nitty gritty of trading. And it is all nonsense. Superstition, numerology, astrology, chartism, pi cycles, fibonacci numbers and other suck mumbo jumbo. Complete foolishness.

 

Ask a trader when was the last time they read a companies anual report. They will likely never have read one, ever. Fundamentals are irrelevant to trading. They just like to gamble on market movements. It is gambling and nothing more. As with all gamblers, they feel very clever when the gamble pays off and silly when it does not. In general, though, traders only really gain by following market trends.

[Perishabull]

Trading is the greatest game in the world, bar none. I find it rather juvenile when the silver bulls complain about trading (with their net worth down by x%) but only when the market goes down and not up. Perhaps a more forward thinking approach is to accept in your minds that markets go two ways, and each way offers a great opportunity.

[Pixel8r]

Trading is the greatest game in the world, bar none. I find it rather juvenile when the silver bulls complain about trading (with their net worth down by x%) but only when the market goes down and not up. Perhaps a more forward thinking approach is to accept in your minds that markets go two ways, and each way offers a great opportunity.

 

How is it juvenile to try to work out a solution to what is wrong in the world currently? Why do you think that I don't realise that markets go up and down? I obviously realise that markets go up and down that is why I sold my house and moved into rented in 2006.

 

As I have tried to explain, in a way that isn't very clear I grant you, i think that people are better placed doing work which is productive rather than focusing their attentions on trying to out smart other traders. Trading is a game, as you say above, but it is one of winners and losers. For each trade there is a winner and a loser so the whole doesn't benefit from the action of the trade, equity just shifts from one place to another. If your work involves producing something that didn't exist previously the whole has gained the thing that has been produced, so there isn't a loser. Imagine if the whole world took up trading, there would be massive disruptions as things swung one way then the other as the PTB manipulated things in their favour. The game is always won by those in power as they control the rules to the game. Most traders and gamblers end up losing thier money that is a fact. Read James Dines mass phycology book, in it he talks about how gamblers have a need to lose. I heard a statistic the other day which is relevant, 90% of futures traders lose all their money within 6 months. Who knows maybe you will be in the 10% who don't but ask yourself are you actually doing anything productive with your life.

 

I think it is juvenile to try and put down conversations that are trying to work out a solution to the mess the world is in. Perhaps a more forward thinking way for you would to be to realise that not everything in the world is about increasing your net worth, that quality of life actually stands for something as well.

[Icarus]

Trading is the greatest game in the world, bar none. I find it rather juvenile when the silver bulls complain about trading (with their net worth down by x%) but only when the market goes down and not up. Perhaps a more forward thinking approach is to accept in your minds that markets go two ways, and each way offers a great opportunity.

 

Personally, I care what you do. Other than possibly keeping some cash away from the real commodity silver OTC derivatives should have no major impact on the silver market. No silver is bought or sold. It is pure gambling. I have no interest, other than having my money taken through taxes and given to insolvent banks to allow you to gamble at low cost. It is not investors calling traders a mafia, is it?

 

The price of silver going up and down in the short term is not what annoys me. Price fixing by the CME is what I am complaining about. How can anyone invest with the price fixing and market distortion that exist in the silver market? There can be no doubt that prices are being fixed. What other results could five margin hikes per week bring but lower prices? There is no doubt. It is fraud.

[carbon junkie]

Trading is the greatest game in the world, bar none. I find it rather juvenile when the silver bulls complain about trading (with their net worth down by x%) but only when the market goes down and not up. Perhaps a more forward thinking approach is to accept in your minds that markets go two ways, and each way offers a great opportunity.

Timing a market in one direction is hard enough but to think that you can time it in both directions seems somewhat unrealistic.

 

I think the word juvenile is a little harsh but it could also be levelled at those traders who conduct glorified autopsies on their winners but have never once done the same for their losses and then spend an inordinate amount of time on internet forums crowing about it.

 

Maybe they never lose.

[G0ldfinger]

... silver bulls complain about trading ... but only when the market goes down and not up.

Sorry, but the people who are talking out against overtrading on here have done so for years, i.e. all the way UP. Any gold and silver bullion investments have gone up multiples in value since then.

[Perishabull]

How is it juvenile to try to work out a solution to what is wrong in the world currently? Why do you think that I don't realise that markets go up and down? I obviously realise that markets go up and down that is why I sold my house and moved into rented in 2006. I heard a statistic the other day which is relevant, 90% of futures traders lose all their money within 6 months. Who knows maybe you will be in the 10% who don't but ask yourself are you actually doing anything productive with your life.I think it is juvenile to try and put down conversations that are trying to work out a solution to the mess the world is in. Perhaps a more forward thinking way for you would to be to realise that not everything in the world is about increasing your net worth, that quality of life actually stands for something as well.

 

Juvenile was a poor choice of word on my part, apologies for that Pix, I was rushed for time earlier and should have thought more about what exactly I wanted to say. Perhaps I should explain properly what I mean, I know that Ted Butler (and maybe others) have been complaining that HFT (that you have mentioned) has been part of the reason for silver's decline. I'm no expert but I would think that HFT can enhance market direction to a certain extent for limited periods but the market will go where the market wants to go. I don't recall hearing too many complaints from silver bulls about HFT on the way up (although indirectly Tyler Durden aside). That's is all I'm saying.

 

Those statistics about the futures trading I believe are true because any endeavour where huge gains are possible in a short time frame will naturally attract some people with a gambler's mindset, and of course these people are undisciplined people gambling for the thrill or whatever reason they do it for and no doubt that is why they lose. You make a highly valid point asking is it a productive activity to trade, and actually I believe that it really depends on your intentions. I also think that intentions whilst trading are inextricably linked to performance but as this is deviating somewhat from the point of this thread I will complete this post on the other thread you started .

 

 

[Perishabull]

Price fixing by the CME is what I am complaining about. How can anyone invest with the price fixing and market distortion that exist in the silver market? There can be no doubt that prices are being fixed. What other results could five margin hikes per week bring but lower prices? There is no doubt. It is fraud.

 

From what I see, what is happening is beneficial to the silver market since if they (whoever they are) really wanted to finish it, they could by asking 50% straight off the bat. What the CME have done is;

 

removed the gamblers from the silver market,

 

increased flow of static silver (heirlooms/scrap etc) into the market that will get smelted causing a reduction of future silver flow,

 

allowed those that didn't get in first time to get in,

 

So essentially their actions are helping to keep the bull running, in my view. Also if you were the CEO of the CME group would you not be concerned about the volatility of silver. They have to protect themselves and their integrity. As I wrote in another post elsewhere you will know if there is real price fixing if you see margin hikes in gold. That will be the big tell (if it happens).

[drbubb]

The chart shows:

(1)

gold price / (fed.ext.debt / US gold holdings)

 

The ratio

(2)

fed.ext.debt.equ.price of gold = fed.ext.debt / US gold holdings

 

is Sinclair's favourite gold price model. He thinks that the ratio (1) needs to go back to 1.0 every now and then to balance the US debt in terms of gold (there is the "mean reversion" part). He traded out at almost double that in 1980 (at over 1.8 to be precise). But that's why he closed his clients' accounts out at $400, because there the ratio (1) was just over 1.0.

 

I think this is one of the better gold price models, but I see the alternatives. Still, it is better than saying "it's just a commodity!"

Just LOOK AT THE CHART:

It has deviated from the mean of the whole period for such a long time, I cannot see any predictive value in it.

Do you?

[drbubb]

...Imagine if the whole world took up trading, there would be massive disruptions as things swung one way then the other as the PTB manipulated things in their favour. The game is always won by those in power as they control the rules to the game. Most traders and gamblers end up losing thier money that is a fact. Read James Dines mass phycology book, in it he talks about how gamblers have a need to lose.

In manias - and there have been many in history going back to the South Sea Island bubble (and before!), many people do turn to trading and think they can get rich by buying the bubble asset.

 

-- Nope - this isn't silver !

 

Look at Isaac Newton. A very clever man, he got nearly wiped out participating in the bubble:

Very smart people lost fortunes in the scheme such as Sir Isaac Newton who lost the equivalent of today's $4 million. The Company actually made little profit from trading goods and slaves with the Spanish colonies in South America - as was the charter of the Company. The bubble was formed, instead, when the company arranged to take over a large portion of England's public debt.

 

In 1720, when South Sea's stock soared in the wake of speculation and greed surrounding the monopoly the South Sea Company was perceived to have in the shipping and trade industries, particularly in Mexico and parts of South America.

/more: http://web.rollins.edu/~jsiry/South_Sea-Bubble.html

 

What is the signature of a bubble?

A parabolic price move. When I see one, I know from experience not to be buying near the top, and instead to be looking for a chance to exit, or even go short - hence the "Silver peak near $50" which caught to top beautifully.

 

This current thread is about how one might trade a market on the right side of a parabolic move.

[drbubb]

The Silver price was virtually UNCHANGED on the week.

(SLV fell from: $34.48 to : $34.39, that's only 7 cents !)

 

I managed to stay ahead of time decay by making timely trades near the extremes of the week:

 

 

UPDATE: Friday Close: 13 May:

(Silver : $35.36 / SLV : $34.39 / USD : $75.71 )

 

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

SLV$34.39

Cash--- : - - - - -- $ 0 : - $4,152 K : - $4,670 K :

SLV.oz : --- 100,000 : -- 000,000 : -- 000,000 :

Value- : --- $3,536 K : - $0,000 K : - $0,000 K :

Opt.Oz+/--- 000,000 : -- 080,000 : -- 020,000 : calls

Opt.Oz -/--- 000,000 : -- 050,000 : -- 000,000 : puts

Note --- : --- - None - : opt. ABC - : -- opt. D :

Opt.Val : --- - None - : - $0,764 K : - $0,132 K :

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

TotValue: -- $3,536 K : - $4,916K : - $4,802 K :

Vs B&H: --- 100.0% - : -- 139.0% : -- 135.8% :

======

Options:

A / jun.$30c - bot at $6.00 / 30,000 x $5.27close = $158K

B / jul. $29c - bot at $6.35 / 50,000 x $6.42close = $321K

C / may$40p- bot at $3.61 / 50,000 x $5.70close = $285k

D / oct.$30c - bot at $6.50 / 20,000 x $6.62close = $132k

Closed: Sold 20,000 option B at: $7.50

 

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

======

28 Apr.: --- $4,800 K : - $4,800K : - $4,800 K : $47.26 x73.12 / 3.7056 =# 9.326

06 May: --- $3,550 K : - $4,799K : - $4,800 K : $34.48 x74.84 / 3.3735 =# 7.650

13 May: --- $3,536 K : - $4,916K : - $4,802 K : $34.39 x75.71 / 3.3853 =# 7.692

[drbubb]

GF,

What is this chart meant to show?

EXAMPLE:

GF,

Have you factored this "information" into your gold calculations ??

 

ii) Daniel Estulin's blog entry

: http://translate.google.com/translate?hl=en&sl=es&tl=en&u=http://www.danielestulin.com/2010/11/10/camino-del-misterio-estulin-en-radio-intereconomia/&rurl=translate.google.com#more-2761

MORE on that GOLD in the Philippines...

 

Background

 

Since 1937, the Japanese Emperor ordered his younger brother, Prince Chichibu, to lead an ultra-secret operation codenamed "the Golden Lila" whose task was to loot the wealth of Asia for the benefit of Imperial Japan. The large amount of history and heritage stolen by the Japanese reached the limits of the most mythical, fantastic and unsuspected, far more than ever imagined. In fact, the amount of gold stolen between 1937 and 1943 far exceeds the combined reserves of gold of all the world's central banks.

 

 

After Stalingrad, in early 1943, the inertia of war began to turn against the invaders. Nazi Germany in the West and Japan in the East were losing. Plans to move the treasure to Japan had to be changed - if only as a temporary measure. The Japanese army took the gold in the islands and had to leave it there, while retreating defeat after defeat in the vain hope of returning at the end of the war and recover the loot in secret. A group of Japanese army officers, with the help of a special brigade of engineers, began to bury the treasure. Took months to dig and build complex tunnel systems large enough to store the trucks and sometimes deep enough to devise below the water surface.

 

The vast amount of gold and other treasures were divided into trunks of various sizes before being buried. Most of it, for a total of 172 trunks, was buried in or around the Philippines before the end of the Second World War. Japanese occupied cartographers to make maps of every hiding place and the confidence of the emperor's accounting trunks marked with three digits that distinguish the value of gold each in Japanese yen. Only a hiding marked "777" from "The Golden Lila", about Teresa, the most substantial of the treasury, would store more than 90,000 metric tons of gold, equivalent to 75% of the world's official reserves and value $ 101, 272, 500, 000 U.S. dollars in 1945 when the yen was trading at 3.5 per dollar, an amount that dwarfs the current global debt and we are astounded and bocabiertos.

 

Another tunnel found near Teresa measured 500 meters long and had piles of gold stored in a meter tall, lined up along the entire tunnel. In total, 100,000 bars of a weight of 12.5 kg each, were recovered. This gold included "real gold" that the British royal family were sent to the Philippines to protect it in case Hitler conquer Europe.

 

However, this secret was too tempting to keep it so tight. In late 1944, the U.S. had broken secret encrypted communications of the Japanese and had prepared their own plans to become a more valuable loot the very Holy Grail.

Officials of the American OSS (the precursor to the CIA) began a clandestine recovery operation in the Philippines between 1945 and 1948, led by two secret agents of the OSS - a Filipino-American officer and a member of Opus Dei, Severino Garcia Santa Romana and General Edward Lansdale, one of the main suspects in the assassination of President Kennedy. The search team of the CIA had taken four years to find the treasure first cave, located more than seventy feet below the ground. The Golden Lila had buried the treasure using a sophisticated technique developed by Japanese engineers and left signs of how to find it using unusual rock formations and strangely cut rocks and other topographic very easy to conceal its location.

 

Another well-known individual who was released in search of gold was Ferdinand Marcos, who was then a poor mountebank with unlimited ambition. Between 1953 and 1970, with the help of the Japanese POWs, Mark dug up just over 600 metric tons of gold ... until he could gain the treasure map in late 1971.

== ==

 

Can you really be sure there is nothing to it?

[drbubb]

THIS CHART could prove useful - Silver divided by the CRB

 

Next low might be tow months away in July (?)

 

CHART - AG to CRB ... update

[G0ldfinger]

Just LOOK AT THE CHART:

It has deviated from the mean of the whole period for such a long time, I cannot see any predictive value in it.

Do you?

Yes, I do.

 

Gold has been completely out of favour for decades. In fact, it still is. The recent rise has looked impressive, but is ridiculously miniscule when compared to US debt and US money supply. This chart simply shows that gold still is very cheap. All the "value" gold has gained can not make up for the financial folly of the US (central) banksters and politicos. This chart shows you what's in store when gold wakes up for good. That's why I'd rather not bother to pick nickels in front of that steam roller.

[G0ldfinger]

What is the signature of a bubble?

A parabolic price move. When I see one, I know from experience not to be buying near the top, and instead to be looking for a chance to exit, or even go short - hence the "Silver peak near $50" which caught to top beautifully.

So, silver had a correction after a nice rise in price. Fine, and you called it (like some others too). But a "bubble"? :lol:

 

Come on, it didn't even make the 1980s high!! In 1980 you could buy an average UK house for GBP 25,000. In 2007 it was GBP 185,000. Yes, there you have a nice bubble. But silver?? Come on!

[Pixel8r]

So, silver had a correction after a nice rise in price. Fine, and you called it (like some others too). But a "bubble"? :lol:

 

Come on, it didn't even make the 1980s high!! In 1980 you could buy an average UK house for GBP 25,000. In 2007 it was GBP 185,000. Yes, there you have a nice bubble. But silver?? Come on!

 

Value - cost / cost x 100 = % gain

 

 

185,000 - 25,000 / 25,000 x 100 = 640%

 

50 + 640% = $370

 

So when silver hits $370 they will have the right to call it a bubble.

 

Robin Griffiths thinks silver could eclipse $450.

[G0ldfinger]

Can you really be sure there is nothing to it?

Hmm, I am still digesting all the UFO stories, but maybe I'll have a look at it later.

 

Bubb, how can you be sure that there is not a huge amount/unlimited supply of paper options out there, .... Oh, wait!!!

 

(Mmmh, should I notch my warn status up by 10%?)

[Pixel8r]

In manias - and there have been many in history going back to the South Sea Island bubble (and before!), many people do turn to trading and think they can get rich by buying the bubble asset.

 

-- Nope - this isn't silver !

 

Look at Isaac Newton. A very clever man, he got nearly wiped out participating in the bubble:

Very smart people lost fortunes in the scheme such as Sir Isaac Newton who lost the equivalent of today's $4 million. The Company actually made little profit from trading goods and slaves with the Spanish colonies in South America - as was the charter of the Company. The bubble was formed, instead, when the company arranged to take over a large portion of England's public debt.

 

In 1720, when South Sea's stock soared in the wake of speculation and greed surrounding the monopoly the South Sea Company was perceived to have in the shipping and trade industries, particularly in Mexico and parts of South America.

/more: http://web.rollins.e...Sea-Bubble.html

 

What is the signature of a bubble?

A parabolic price move. When I see one, I know from experience not to be buying near the top, and instead to be looking for a chance to exit, or even go short - hence the "Silver peak near $50" which caught to top beautifully.

 

This current thread is about how one might trade a market on the right side of a parabolic move.

The thing is that silver is currently so under owned by the public in general, there is no way it can be described as a bubble. Bubbles happen when everyone is talking about something and buying it, like the tech bubble and the housing bubble of recent times.

 

There is no way that silver approaching the price that it hit over 30 years ago can be described as a bubble. All that is going on is it having a correction from a rapid movement and panicked margin hikes in quick succession.

 

Are you actually going to buy any during this pullback, or carry on missing out?

 

 

[drbubb]

Yes, I do.

 

Gold has been completely out of favour for decades. In fact, it still is. The recent rise has looked impressive, but is ridiculously miniscule when compared to US debt and US money supply. This chart simply shows that gold still is very cheap. All the "value" gold has gained can not make up for the financial folly of the US (central) banksters and politicos. This chart shows you what's in store when gold wakes up for good. That's why I'd rather not bother to pick nickels in front of that steam roller.

Okay.

But the "value gap" showing on that chart has persisted for so long, many Gold bulls betting on a "return to the mean" may find they have passed away before it returns. As Keynes said: "In the long run, we are all dead."

 

I won't be betting on that.

[drbubb]

So, silver had a correction after a nice rise in price. Fine, and you called it (like some others too). But a "bubble"? :lol:

 

Come on, it didn't even make the 1980s high!! In 1980 you could buy an average UK house for GBP 25,000. In 2007 it was GBP 185,000. Yes, there you have a nice bubble. But silver?? Come on!

A rally from $18 to $48 in about 8-9 months qualifies as a bubble for me, and most other people.

 

The proof?

Of the $30 rally, over half has already been retraced.

 

If you are happy holding through that sort of volatility, when a rather clear selling opportunity presented itself at the top of the parabola near $50, then you have much more "risk tolerance" than I do.

 

Perhaps this thread really demonstrates that the B&H-purists have brass gonads, whilst the rest of us prefer not to risk the families jewels on a near 200% jump in under nine months being part of a bigger bull market.

 

Some here (B&H "purists"?) see it as their duty to get people to hold onto their precious metals holdings "no matter what." One of my objectives in creating this thread, and the "$50-ish Peak in Silver" thread was to demonstrate that an inflexible approach to holding assets can wind up costing investors a big opportunity loss. And I truly want intelligent GEI readers to treat the B&H crowd's "don't sell ever" line with the skepticism that it deserves.

 

Has this point sunk in yet? A more flexible approach (with switching, if that makes you more comfortable than selling out) is likely to be a winner in the long term. Let the Buy-&-Hold Purists "stay the course", and at the top they can brag about how they held on, while the sensible folk are banking some profits on positions that may have grown large through careful trading.

== ==

 

I just listened to the weekend podcast from Chris Walzek.

 

He said, "WE MAY BE LUCKY ENOUGH to buy silver in the $20's."

Fine.

 

But With WHAT, Chris?

 

 

You told your listeners to buy and hold, so how much cash are they going to have on hand to buy a cheap market?

 

Moreover, with little cash, and sitting with a big opportunity loss, are they going to have the CONFIDENCE that they need to Buy below $30?

 

Meantime, our two Alternative Portfolios are sitting with oddles of cash, cherry picking the day-to-day opportunities as they arise. It is much easier to trade from a position of strength, rather than with little cash and little confidence.

[drbubb]

The thing is that silver is currently so under owned by the public in general, there is no way it can be described as a bubble. Bubbles happen when everyone is talking about something and buying it, like the tech bubble and the housing bubble of recent times.

You obviously have missed out on the gianormous number of Silver Bull ads and articles, and the hysterical commentary about the antics of JPM and Blanche Masters that you can find all over the web.

 

A major point of that chart is to show how parabolic moves often retrace THE WHOLE of the move up.

 

My own "ideal target" for silver is $26, and I will be happy with $30 (we saw SLV-$31-ish in overnight trading). But maybe I am too bullish on the grey metal, and should be targetting $18.

[drbubb]

You obviously have missed out on the gianormous number of Silver Bull ads and articles, and the hysterical commentary about the antics of JPM and Blanche Masters that you can find all over the web.

A Google SEARCH on "Silver Bulls" turned up these gems...

 

Silver-Backer Sprott Still Believes. Deeply.

5 days ago

By Carolyn Cui After silver suffered its worst one-week drubbing in three decades, one of the biggest silver bulls gave a pep talk to hundreds of followers

/ http://blogs.wsj.com/marketbeat/2011/05/09/silver-backer-sprott-still-believes-deeply/

 

The False Myths of Gold & Silver Bulls Promulgated by Gold ...

10 May 2011 ... The definitive investment blog for investment news not discussed in the mainstream media. Learn the best ways to invest money, how to profit ...

/ http://www.theundergroundinvestor.com/2011/05/the-false-myths-of-gold-silver-bulls-promulgated-by-gold-silver-bears/

 

“Thanks to the silver cheerleaders, silver bulls lost $4.3 billion ...

9 Mar 2011 ... 19 Responses to “Thanks to the silver cheerleaders, silver bulls lost $4.3 billion dollars as the number of contracts on Comex dropped to ...

/ http://maxkeiser.com/2011/03/09/thanks-to-the-silver-cheerleaders-silver-bulls-lost-4-3-billion-dollars-as-the-number-of-contracts-on-comex-dropped-to-about-75000-once-again-today-silver-contracts-are-about-150000-its-a-c/

 

Why Long-Term Silver Bulls Are in Good Shape

16 Apr 2011 ... The silver price is examined in this essay as having a long way to go before it reaches its peak, as the commodity and precious metals bull ...

/ http://dailyreckoning.com/why-long-term-silver-bulls-are-in-good-shape/

 

== == ==

There are hundreds of more entries like.

 

In the first article:

Mr. Sprott also addressed one of the most contentious questions between bulls and bears in the silver market: how much above-ground silver is there? Many bulls think all the silver being produced has been consumed and disappeared. Therefore, silver is facing a shortage.

 

However, mainstream commodities analysts think that some of the silver used in photographic films or batteries has been recycled and come back into the market as “secondary supply.” In other words, there’s more silver than bulls argue. Globally, total bullion stocks should at least be 1.5 billion ounces, including silver held by exchange-traded funds and private holdings in the form of coins and bars, according to GFMS Ltd. a London-based metals consultancy.

 

“Why shouldn’t silver appreciate more than gold if there’s less silver around,” asked someone in the audience.

 

“Do you want to come up to the stage?” Mr. Sprott quipped. “If gold goes to $3,200, silver should be at $200.”

 

If $200 isn't high enough for you, then the last link above, has to be my favorite:

 

Silver topped at $50 in 1980. Today, adjusted for inflation, that would be $143.

 

Of course, that figure grants the Bureau of Labor Statistics the right to geometrically weight, hedonically fudge and substitute all kinds of skewed figures to get their numbers. If you used the consumer index, as the old school wonks did back in 1980 — and as our friend and contemporary wonk John Williams at Shadow Stats still does — you’d be looking at a silver price of $490.

 

Heh. Seriously.

 

We’d be surprised to see silver reach $490, wouldn’t you?

 

Still, there’s ample headroom between the current silver price and the inflation-adjusted record. Long term, if you’re a silver bull, the odds are on your side, even if it pulls back some more in the short term.

 

Addison Wiggin for The Daily Reckoning

 

/ More: Why Long-Term Silver Bulls Are in Good Shape http://dailyreckoning.com/why-long-term-silver-bulls-are-in-good-shape/#ixzz1MNXui9gZ

 

You can choose to wait for $490 an ounce, if you like.

But when I see a parabolic move like that, and such widespread promotion of the "merits of Silver" to newbies, I will take my money and look for something cheaper. Thanks.

[drbubb]

Hey, I love the ROMANCE in the mining market as much as anyone.

 

Here's a great example:

 

 

"Finding El Dorado's 'Lost City of Gold'":

http://agorafinancial.com/reports/MSS/ed/MSS_eldorado_vp.php?code=WMSSM500

 

I might even buy some (at the right price) - But I do try to understand that stories like this are playing off our greed and desire to find a good story - and especially those with a nice historical angle to it.

 

You need to keep your feet on the ground and balance risk and reward, while watching what the crowd is doing.

 

== == ==

 

NOTE:

 

"The violence has been exported to Mexico," was a common refrain we heard on last month's exploratory mission to Colombia.

 

Ironically, the improving security situation in the land of El Dorado has opened what may be one of the best ground-floor investment stories in the Western Hemisphere over the next several years… at the expense of communities much closer to Texas, New Mexico, Arizona and California than most of the media seem willing to admit.

 

If you're interested in investing in El Dorado while the market is still beaten down, we urge you to consider Chris Mayer's argument presented here. Still today, we're inexplicably intrigued by ongoing street war closer to home.

 

/see: http://www.gold-speculator.com/5min-forecast/54262-front-shall-not-named.html

[drbubb]

"Finding El Dorado's 'Lost City of Gold'":

http://agorafinancial.com/reports/MSS/ed/MSS_eldorado_vp.php?code=WMSSM500

Stock Gumshoes, sniffed out one of Chris Mayer's previous picks...

 

Brigus Gold (BRD in both Toronto and NY) ... update

 

“The golden opportunity of a generation,” per Mayer, (?) as interpreted by the machinations of the Mighty, Mighty Thinkolator must be …. Brigus Gold (BRD in both Toronto and NY)

 

Brigus is a company I know of only because one of my larger holdings, Sandstorm Gold, helped to finance the expansion of their Black Fox Mine (that’s the one near Timmins) by buying a 12% “gold stream” on the property.

 

And Brigus, though young, has been a disappointment for investors during this gold bull market — they were created by a merger between Linear Gold and Apollo Gold just last Summer, which I suppose was at least “quiet” enough that I never heard about it (not that I was listening), and they used to have a huge hedge position that meant the upside was somewhat limited for their Black Fox production. The Sandstorm financing deal was done largely to remove that broader hedge position and give them more exposure to rising gold prices. I don’t know why they haven’t gotten some of the “love” that’s granted to other explorers and miners, but it might just be that their properties don’t fall into the “spectacular” class, they’ve been small scale producers, and the projected production from their one existing mine is fairly limited so far (though Sandstorm’s bet is clearly that the mine will be expanded beyond the current plans).

 

Brigus does have the other properties teased by Mayer as well — they own the Goldfields property in far northern Saskatchewan which includes deposits they call Box and Athona, near Uranium City on the North Shore of Lake Athabasca. They say that a “production decision is pending” on these properties, which are their most advanced non-producing properties and have gone through at least some of the feasibility studies required — assuming they go through with it, they’ve been saying that production could start in Goldfields in 2013.

 

/more: http://stockgumshoe.com/2011/04/what-is-chris-mayers-new-golden-staircase-tiny-gold-mining-stock.html