Blade Opines on Money and Anesthesia

[pgg]

I've joined the nutjobs in buying some food storage (not nearly enough); but it's about impossible right now to buy any.

Freeze dried is about the only stuff that seems to be really unavailable these days. Sucks, 'cause I love me some freeze dried strawberries. I eat them like stoners eat Cheetos.

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[Narcotized]

I NEVER said that our economy was recovering.

I'm sorry; that comment in no way was directed at you despite using a quote of yours. That was directed mostly at the media that continually says we "are in a recovery," and asks "will the recovery faulter?"

 

[BLADEMDA]

http://jimrogers-investments.blogspot.com/


Jim Rogers is one of the smartest investors of commodities.

 

[BLADEMDA]

 

[BLADEMDA]

 

[BLADEMDA]

Gold will likely surpass its Inflation adjusted all time high of $2275 an ounce before the bubble bursts. The million dollar question is just how high will Gold go before the bubble pops? $2500 an ounce? 5,000 an ounce?

 

[pgg]

Gold will likely surpass its Inflation adjusted all time high of $2275 an ounce before the bubble bursts. The million dollar question is just how high will Gold go before the bubble pops? $2500 an ounce? 5,000 an ounce?

If gold hits $5000/oz we're going to have more pressing problems than retirement portfolio asset allocation percentages. We'd be looking at life and culture-changing problems. Fuel too expensive for people to commute to work. Food expenses surpassing 50% of household budgets the way they do in developing countries. Rationed medical care. Elementary school classes of 70 kids. Widespread poverty compounded by huge police force cuts, with the resulting crime desperate people commit.

I guess I'm just kind of tired of rising PM prices being discussed in terms of hopeful profit or wealth preservation, and not the horrific social calamity such an event would really portend. The average goldbug talking about $5000/oz prices is excited, not afraid, and that speaks volumes.

 

[Narcotized]

Agree with the chart. Care to share where we are on the chart now?

I would say we are only in the take off phase. There is too much skepticism and bubble talk to be much further than that; maybe media attention phase at best. Driving the flight to metals is the FED printing press. If hyperinflation were to hit (not guaranteeing it will), the target price is literally infinity. Even if you sell at $5000 for a massive profit, hyperinflation would totally wipe you out and leave you with worthless paper.

With the ridiculous debt situation we have, gold is a way to preserve wealth; not meant to grow it. In other words, I'd bury some away and never sell it; using it only for that rainy day down the road when your dollar bills are used as handy wipes and coke snorters.

 

[BLADEMDA]

I would say we are only in the take off phase. There is too much skepticism and bubble talk to be much further than that; maybe media attention phase at best. Driving the flight to metals is the FED printing press. If hyperinflation were to hit (not guaranteeing it will), the target price is literally infinity. Even if you sell at $5000 for a massive profit, hyperinflation would totally wipe you out and leave you with worthless paper.

With the ridiculous debt situation we have, gold is a way to preserve wealth; not meant to grow it. In other words, I'd bury some away and never sell it; using it only for that rainy day down the road when your dollar bills are used as handy wipes and coke snorters.

I agree. We are at the "take off phase" of the chart. Gold needs to surpass $2,000 an ounce before any "froth" really starts developing.

I have a core position in precious metals at 5-7% of my portfolio which isn't for trading. Then, I have another 5% which I plan on selling around $2200 an ounce. Same for silver. (sell at $45-49 an ounce).

Gold Stocks will be bought and traded until the PM hits $2,000 an ounce. After that I will scale way back.

The problem with Tech stocks in the late 1990's was people forgot to hit the SELL button. At Nasdaq 4,000 it seemed the party would never end.

It's extremely difficult to buy at the bottom and sell at the top. That's why you need to get out EARLY despite leaving 20% or more potential gains on the table.

As for Real Estate I never played in that game one way or the other. But, I do like REITS and Real Estate NOW.

 

[BLADEMDA]

This thread is about more than Gold and Silver. All the other commodities are doing well. Take a look at CAT, DE, XOM, COP, CVX, PPG, etc. Many are at or near 52 week highs.

Energy is going to surpass 2008 levels by the end of this year or next.
Inflation is highly likely by the end of this year. Is your portfolio properly aligned for the oncoming inflation? What about the debasement of U.S. currency? Again, is your portfolio properly positioned for a declining U.S. dollar?

The reason it is different this time is because of record U.S. National debt and QE1, QE2 and possible QE3 before it all ends. Actions have consequences and the "Bernanke" is creating some serious consequences by printing so much money.

Just take a look at the market and stock prices for certain companies.

 

[sevoflurane]

This thread is about more than Gold and Silver. All the other commodities are doing well. Take a look at CAT, DE, XOM, COP, CVX, PPG, etc. Many are at or near 52 week highs.

Energy is going to surpass 2008 levels by the end of this year or next.
Inflation is highly likely by the end of this year. Is your portfolio properly aligned for the oncoming inflation? What about the debasement of U.S. currency? Again, is your portfolio properly positioned for a declining U.S. dollar?

The reason it is different this time is because of record U.S. National debt and QE1, QE2 and possible QE3 before it all ends. Actions have consequences and the "Bernanke" is creating some serious consequences by printing so much money.

Just take a look at the market and stock prices for certain companies.

Well, I got out of silver a couple days ago... really wish I had last Friday.

It is taking a major dive bomb... and I don't really know why. Maybe cuz it had too good of a run? Wait until it bottoms out and get more? Geesh...

 

[sevoflurane]

Maybe this graph explains it's performance as of lately.

 

[powermd]

Well, I got out of silver a couple days ago... really wish I had last Friday.

It is taking a major dive bomb... and I don't really know why. Maybe cuz it had too good of a run? Wait until it bottoms out and get more? Geesh...

Maybe because it's heavily manipulated and JPM has an enormous short position it needs to cover. They have a seat at the table where important decisions are made, like COMEX changing margin requirements. You don't. Silver will rise again, but I would look for a major pullback. The dollar index could still bounce quite a bit. We have all kinds of fund managers predicting a 10% drop in the SPX by mid Summer based on this prospect. Commodities will be raped along the way. Longer term, the dollar will probably head back down to the low 70s, and commodities will rise.

Blade, Sevo, I'm part of a option trading community at philstockworld.com. It's not cheap to join, but there are different levels of membership. If you actively manage your portfolio, it's a great place for all kinds of trading ideas, ranging from day trades to long term income plays. For example, Phil posted a short term play on silver the other day that has been a real home run. AGQ June11 150 puts for $1.50(ish) when the ETF was $300. The puts are now $12!! That's an extreme example, of course, and no- he doesn't have grand slams like that all the time. His income plays would probably interest you more. For example, buy stock in an REIT, and sell puts and calls to lower your base and protect you from a drop in the price of your stock. Not only do you get the dividend, but you get the premium from your option sales. Your greatest risk is owning more of a stock you like at a discount, or getting called away at a smaller profit than you hoped for. It's kind of like creating your own hedge fund. Let me know if you actually join, because I can get a credit toward my subscription for hooking new members. Phil is talking about closing the premium membership, as there are already a lot of participants in the daily chat, so you may want to jump on this soon if you think it suits you.

 

[sevoflurane]

Thanks for the input. Yeah... I'm getting to the point where I might want most of my funds to be actively managed by someone else. I'm a bit too diversified at the moment to keep my finger on the pulse of 15 or so stocks/ETF's. I'm happy with how things have gone without having to pay a commission, but as the pot gets bigger I get more anxious and apprehensive. I'm up 18% in 2 yrs... which is just OK since the 20% run up lat last year/earlier this year.

Silver is a case in point. In the natural word, there is a 1:16 ratio of gold to silver. Gold at $1500+ an oz should mean that silver could be expected to be around $70 oz. adjusting for other factors. So I try and make sense with all my investments. But as you say, big name companies can manipulate the market and create panic.... and it all can come tumbling down in a matter of days.




One of the lessons I have learned over the last couple years is that you need to know when to sell despite short term capital gains....

Say I'm up 45% with xxx: the market is acting a little shacky, Osama Bin Laden is dead.... To not sell part of that and take a profit is just a bit greedy. The next couple days you are down 35%.... and missed the boat. Ouch.!!

Honestly, in my embryonic stage of investing, I think selling is harder than buying.

All that said, this ride has been very interesting. I do find it mentally stimulating. But you have to have the finger on the pulse... and that is hard to do when you are diversified (or overdiversified).

So wacha think? Is it time to buy silver again? It's up for the first time since it tanked. I think it may be a good deal at 34 and change.... still volatile though... and I don't know where the resistance is going to be.

 

[sevoflurane]

Nice job with ultra silver btw....

and since I started writing this post... silver is up 4.5%

 

[Norick13]

Someone has been watching a little too much Glen Beck...

 

[sevoflurane]

and ultra silver is up almost 10%.

 

[powermd]

Thanks for the input. Yeah... I’m getting to the point where I might want most of my funds to be actively managed by someone else. I’m a bit too diversified at the moment to keep my finger on the pulse of 15 or so stocks/ETF’s. I’m happy with how things have gone without having to pay a commission, but as the pot gets bigger I get more anxious and apprehensive. I’m up 18% in 2 yrs... which is just OK since the 20% run up lat last year/earlier this year.

Silver is a case in point. In the natural word, there is a 1:16 ratio of gold to silver. Gold at $1500+ an oz should mean that silver could be expected to be around $70 oz. adjusting for other factors. So I try and make sense with all my investments. But as you say, big name companies can manipulate the market and create panic.... and it all can come tumbling down in a matter of days.




One of the lessons I have learned over the last couple years is that you need to know when to sell despite short term capital gains....

Say I’m up 45% with xxx: the market is acting a little shacky, Osama Bin Laden is dead.... To not sell part of that and take a profit is just a bit greedy. The next couple days you are down 35%.... and missed the boat. Ouch.!!

Honestly, in my embryonic stage of investing, I think selling is harder than buying.

All that said, this ride has been very interesting. I do find it mentally stimulating. But you have to have the finger on the pulse... and that is hard to do when you are diversified (or overdiversified).

So wacha think? Is it time to buy silver again? It’s up for the first time since it tanked. I think it may be a good deal at 34 and change.... still volatile though... and I don’t know where the resistance is going to be.

Too early to tell on silver. I'll be looking for the dollar to bounce into the 76ish range, and then take another look. For now there will be a lot of volatility without much clarity.

I agree one of the hardest decisions to make is when to take a profit. Generally a 20% gain on a short term play is a good time to say enough is enough. Stick to that rule and you will win more often than you lose, although you may give up some home runs. The little wins will begin to add up, and that makes all the difference in the long term. One of the reasons I like PSW style trading is that you make much of your gains on loss of time value in options. The stock doesn't have to go anywhere, and you make money. Options give you a lot of flexibility simple stock ownership doesn't permit. If a position moves against you, you can always roll the options higher, provided you have adequate portfolio margin. It may take time, but ultimately you can right the ship and win the trade (unless it's a total blowout, which you should have planned for from the beginning).

 

[pgg]

Gold at $1500+ an oz should mean that silver could be expected to be around $70 oz. adjusting for other factors.

Or maybe silver at $35/oz means gold should be at $560. Assuming 1:16 is in fact natural. Or maybe this time is different.

There's been some crazy stuff going on with silver. It's so heavily manipulated, and while not as emotionally charged as gold it's still a metal in a time when people are getting freaked out about the dollar. I have a feeling there's so much blatant lying and shady crap going on that the paranoid people might be right when they predict a large and imminent split between the spot price for paper silver and physical silver.

I quit buying silver in the very low 20s and was going to wait until the QE3 announcement to sell some of it off. Most of my silver is the actual physical commodity in my possession and was purchased as a long term preservation; selling it in non-pawnshop quantities takes some effort. I have a hard time buying long when the spot price has more than doubled in a matter of months. If it goes below $30 I'll probably talk myself into getting more.

You investor trader guys would probably vomit if I told you that the last 5 or 6 months I've actually been putting most of my extra income into a plain old non-tax-advantaged cash savings account. But there's a high probability that we will have a significant land purchase this summer and want to be liquid for that. I don't know what we're going to do after that's done (or if it falls through) though.

In the meantime, I'm moonlighting all the hours I can get, subject to my day job's limits, making hay while the sun is shining, and not blowing it all trying to keep up with the ortho spine lifestyle.

 

[deleted126335]

You investor trader guys would probably vomit if I told you that the last 5 or 6 months I've actually been putting most of my extra income into a plain old non-tax-advantaged cash savings account.

In the meantime, I'm moonlighting all the hours I can get, subject to my day job's limits, making hay while the sun is shining, and not blowing it all trying to keep up with the ortho spine lifestyle.

+1. My most recent purchases: Munis (highest quality) and I bonds.

 

[powermd]

You investor trader guys would probably vomit if I told you that the last 5 or 6 months I've actually been putting most of my extra income into a plain old non-tax-advantaged cash savings account. But there's a high probability that we will have a significant land purchase this summer and want to be liquid for that. I don't know what we're going to do after that's done (or if it falls through) though.

Not at all. The theme for the past 8 mos or so at PSW has been to stay mainly in cash, looking for opportunities here and there. Phil Davis is NOT a PM-bug. Gold is pretty useless in terms of industrial demand, and is thus primarily a vehicle for wild speculation on inflation. At least some of the other metals have industrial uses to guarantee demand. I believe he wrote an article proposing the idea of basing a currency on arable land- the agri-buck. Ultimately we all need to eat. Congrats on the land purchase, I hope it works out for you. My wife and I are considering a purchase of 16 acres where we live.

 

[sevoflurane]

So what happens to gold and silver if and when the dollar looses it's status as the world reserve currency....? Like the British Sterling did during the second half of the 19th century>>People flocked to gold.

Correct me if I'm wrong, but China is buying up these commodities aggressively and not taking on US debt the way they used to. In fact they've been selling billions and billions of dollars in US treasury bonds the last couple of years devaluing our dollar as we print more.

I know... a little doom an gloom, but definitely on my little embryonic radar.

 

[sevoflurane]

Corn prices are up 74% in one year.... I know some farmer docs that are doing very well.

People have to eat.

 

[Monty Python]

Corn prices are up 74% in one year.... I know some farmer docs that are doing very well.

People have to eat.

True, but one could argue that's an aberration due to government support and encouragement of increased ethanol production. And I think they're about to release gasoline which is 15% ethanol, up from the current 10% (which my 2000 model year car won't be able to handle, thanks Uncle Sam).

 

[deleted126335]

Corn prices are up 74% in one year.... I know some farmer docs that are doing very well.

People have to eat.

True, but there is no investment that an individual investor could buy that accurately tracks spot prices of corn or most commodities other than precious metals.

 

[Impromptu]

Emergency Essentials is a great place for your food storage needs. I purchased one of their year supply sets, which was shipped for free and surprisingly doesn't take up too much space. On Craigslist I was able to find 7 industrial grade 50 gallon barrels to store water in (all that dehydrated food will take some water). I also have a hand powered wheat mill and lots of wheat (which can store for 30 years).

http://beprepared.com/

 

[sevoflurane]

Ultrasilver closed today 15% up.... I think I missed the bottom.

We'll see what it looks like tomorrow at the opening bell.

 

[sevoflurane]

.

 

[pgg]

Emergency Essentials is a great place for your food storage needs. I purchased one of their year supply sets, which was shipped for free and surprisingly doesn't take up too much space. On Craigslist I was able to find 7 industrial grade 50 gallon barrels to store water in (all that dehydrated food will take some water). I also have a hand powered wheat mill and lots of wheat (which can store for 30 years).

http://beprepared.com/

If you haven't already do the math and add up the calories. EE is a reputable company but often times when these companies bundle up a surprisingly compact "year supply package" it's because it's really a "year supply of 1200 calories/day" which is more or less the Auschwitz survival diet.

 

[Impromptu]

If you haven't already do the math and add up the calories. EE is a reputable company but often times when these companies bundle up a surprisingly compact "year supply package" it's because it's really a "year supply of 1200 calories/day" which is more or less the Auschwitz survival diet.

Yes, they have different tiers of "year supply". So, subsidize it with a bunch of extra wheat or other long-term supplies. I also packed in a few extra fruit buckets to ward off scurvy. It's food and water and will let me survive (assuming my guns and friendly associations help me protect it in an apocalypse scenario).

 

[sevoflurane]

Too early to tell on silver. I'll be looking for the dollar to bounce into the 76ish range, and then take another look. For now there will be a lot of volatility without much clarity.

Yep. That's for sure.... Thanks for posting.

 

[powermd]

Yep. That's for sure.... Thanks for posting.

Silver futures down to 32.65 overnight-- 7%!!
Gold down to 1480.
Dollar futures now 75.76.

It's going to be an interesting day on wall street!

 

[sevoflurane]

Indeed. Commodities taking a hit. Silver really taking a hit. ZSL? Investors moving to another sector? Volatile for sure.

Maybe even PGG will be looking at silver in the next couple of weeks?

 

[powermd]

If you want to see a particularly egregious example of market manipulation, look at a chart for dollar futures going into the open yesterday. Futures were in the 75.70s, guaranteeing a weak open. Then all of a sudden they plummet to the 75.40s! Hmmm..

 

[Socrates25]

Actually the key to making the most money possible is to hire as many CRNAS as possible so you can run 10 rooms simultaneously and bill for all of them at the same time.

Of course, that comes at a small cost of selling out your profession and exposing your patients to "wink and nod" sham supervision under the care of nurses, but hey, making 300k is not enough I want that half a million dollars baby!

 

[BLADEMDA]

Gold will likely surpass its Inflation adjusted all time high of $2275 an ounce before the bubble bursts. The million dollar question is just how high will Gold go before the bubble pops? $2500 an ounce? 5,000 an ounce?

Please take a look at how much money you would have made buying Gold and Silver when I started this thread. The Bubble isn't over. Not even close.

If and when we get our home in order (debt/spending) then that may mark a temporary high in Gold. If Obama wins re-election Gold is going above $2500 an ounce.

 

[BLADEMDA]

Gold is just getting started in its rise to $2,000 an ounce. The world is a scary place and the U.S. Dollar will not look like a stable currency in just a few years after all the Obama debt ($17 trillion and rising) comes home to roost. How long can a country keep printing unlimited amounts of money it does not have? Even a Country like the USA whose money is the RESERVE Currency will eventually have to pay a price for massive debt and high debt/GDP ratio? When will the ratings agencies finally slash our AAA credit rating?

Hard Currency is a way to PRESERVE REAL WEALTH against Fiat currencies.
I look forward to the next few years proving me correct on this theory. All it will take is re-election of Obama and then millions more will be breaking the doors down to buy gold.

I argue the real asset bubble is the U.S. Dollar.

I posted that 5/30/10. It is still true today and Gold is way, way up.

 

[BLADEMDA]

"Gold has been pushing higher because it's no longer just a hedge against commodity inflation, it's also a hedge against a change in world-monetary standards."

I am a buyer of Gold mining stocks and not Gold right now. I would wait for a further correction in Gold (less than $1650, prefer $1600 an ounce) before buying the metal. Gold stocks, on the other hand, look cheap because the underlying asset is over $1700 an ounce.

I am by no means a good trader. I suck at short term trading. But, I do see the value in Gold right now and understand why it will NOT collapse anytime soon. I also have made a handsome sum buying the longer term trends when the market has them "on sale" at big discounts.

 

[BLADEMDA]

The long term chart is still very much intact

 

[BLADEMDA]

 

[BLADEMDA]

Currency in Circulation consists of paper dollars and base metal coins circulating in the economy. The Red Plot (right scale) is CinC in billions of dollars. In the last 36 years, paper money and base metal coinage have increased 1000%. This is a horrendous rate of inflation. If left unchecked, monetary inflation will continue to destroy the American dollar as an economic unit of account. In other words, with the likes of Doctor Bernanke at the helm of the Federal Reserve, it's highly doubtful that the US dollar, AND the world as we know it, will last another 36 years. Contemporary Keynesian Economists refuse to even examine the historical aspect of monetary inflation, so we have to go to cultural historians to see monetary inflation's ultimate effects:

 

[BLADEMDA]

nd silver using constant 1920 dollars; first gold:

 

[BLADEMDA]

So, what is Gold's fair value in my opinion? $1700-$2000 an ounce. Now, Gold like Real Estate (remember 2007) and Tech stocks (remember 1999) is in a bubble phase. This means Gold could go to double my fair value estimate and peak at $3400-$4,000 an ounce before crashing.

The key to understanding Gold's value and whether it will go over $3,000 an ounce is how we handle our debt, long term obligations (SS, Medicare/Medicaid) and spending habits. There won't be a real break in the trend of Gold until these real issues are addressed and solved. Right now the market does not believe Obama has any intent on solving the fiscal crisis; on the contrary, Obama plans on printing and spending more money.


A Perry/Romney Presidency combined with Republican control of both Houses of Congress may cause the first real retracement of Gold prices in years. I know I may be a seller of Gold next year if the Republicans gain control of the U.S. govt.

 

[BLADEMDA]

Is it possible that Gold needs a few more weeks before its next up-leg begins? Sure, that could very well be the case. If this were to occur, this would actually lay the groundwork for a more powerful move to the upside and an eventual push through $2,000. Note how both Goldman and J.P. Morgan raised their price targets on the underlying metal this past month, with J.P. Morgan stating that gold could hit $2,500 by the end of 2011. We expect these and additional upside projections on the yellow metal to ultimately allow additional institutional investors to gain comfort with buying gold in the $2,000s. Just as Fred Hickey predicted in his newsletter last month, as this process unfolds new institutional investors will be forced to play catch up after missing out on Gold’s move to $2,000. With a limited number of big-cap miners to choose from, this should usher in a major move in all the mining stocks. Even those with questionable reserves will eventually jaunt higher.

 

[BLADEMDA]

We are entering the enthusiasm portion of this chart. Greed is next.

 

[pgg]

We are entering the enthusiasm portion of this chart. Greed is next.

I don't know why that chart is so popular.

I've heard "the fundamentals have changed" and "new paradigm" and "it's different this time" as much about gold as I did about real estate. The truth is we might be anywhere on the left side of that curve right now.

 

[BLADEMDA]

“Gold has been pushing higher because it’s no longer just a hedge against commodity inflation, it’s also a hedge against a change in world-monetary standards."

I am a buyer of Gold mining stocks and not Gold right now. I would wait for a further correction in Gold (less than $1650, prefer $1600 an ounce) before buying the metal. Gold stocks, on the other hand, look cheap because the underlying asset is over $1700 an ounce.

I am by no means a good trader. I suck at short term trading. But, I do see the value in Gold right now and understand why it will NOT collapse anytime soon. I also have made a handsome sum buying the longer term trends when the market has them "on sale" at big discounts.

I'm getting interested in adding to my Gold position. $1550 and I'm a buyer. Silver an under $28 an ounce and I'm buying more as well.

 

[BLADEMDA]

 

[BLADEMDA]

look at thre chart from 3 years ago. Gold "corrected" from $900 to $720. Did I buy then? No. I was too afraid. Instead, I waited for Gold to go over $900 an ounce again before buying

Now, it's 3 years later and Gold is in correction phase again. $1900 to $1600. This time I'm a buyer!!

 

[pgg]

I'm getting interested in adding to my Gold position. $1550 and I'm a buyer. Silver an under $28 an ounce and I'm buying more as well.

So if we're not at "enthusiasm" are we in the "bear trap" or the "bull trap" now?

I too think this is a temporary correction. Stock market losses & margin call prompted PM selling?



I did buy more silver earlier this week. First purchase since it was under $20/oz.

Poking around the internet looking at companies that sell/ship the actual physical metal to your door, I noticed that APMEX has raised their commissions, a LOT, since I last bought from them >1 yr ago.

In June 2010 I ordered a few non-collector shiny things from them, and paid 4.4% over spot. Same product today is 7.5% over spot. Shipping is up a bit too, but it's a drop in the bucket compared to the 3% jump in their premium.

I should quit thinking about buying PMs and just buy stock in the companies milking the PM-buying public.