The Gold and Silver Thread

[Toro]

Considering that precious metals are one of the few assets in a bull market and a semi-frequent topic of discussion on this board, I figured gold and silver deserved their own thread.

I bought back much of my gold and silver exposure yesterday and added a bit today. There is a bid underneath gold, and though silver is extended, there is support at ~$25-$26. A few weeks of consolidation for silver would do it a world of good.

 

[Madeline]

This thread ain't about the ladies' preferences in precious metals? Well damn....

Toro, when you buy gold and silver, do you actually take delivery?

 

[Toro]

I do not take delivery.

 

[Valerie]

[ame]http://www.youtube.com/watch?v=oMlqn_Hjyi8[/ame]

 

[Valerie]

Stocks sank, dragging the MSCI Emerging Markets Index down the most in five months, while the dollar and the Swiss franc rallied as fighting broke out between North and South Korea and concern grew Europe’s debt crisis will spread. Metals slid as China’s banks approached lending limits.

Stocks Drop, Dollar Gains on Korea Clash, Europe Debt - Bloomberg

 

[Madeline]

I do not take delivery.

May I hold onto it for you then?

 

[LordBrownTrout]

Toro, what types of purchases do you make on precious metals? I bought some more junk 90 percent coins a week ago when silver fell to high 25's. I always take possession of it.

 

[william the wie]

I think it is important to keep in mind that precious metals as a contra-asset obscures their use in electronics and other forms of high tech. More importantly in these uses silver and gold are not economically recoverable at current prices. The shortage of silver is particularly critical so the upside is not really knowable.

 

[Toro]

Toro, what types of purchases do you make on precious metals? I bought some more junk 90 percent coins a week ago when silver fell to high 25's. I always take possession of it.

I buy ETFs and options on ETFs.

I have thought about buying physical - and storing it in Canada - but have yet to do so.

 

[Toro]

The euro is getting hammered. It is down 2.3 cents as I write this. Gold is significantly higher while silver is off a bit. Right now, my exposure is primarily gold but I do have options on silver. I will quickly sell my position if I think I am wrong in the short term.

 

[Toro]

I do not take delivery.

May I hold onto it for you then?

Expect a Brink's truck outside your house tomorrow.

 

[Madeline]

Wait, wait.....I had in mind a UPS guys and a Tiffany's catalogue......

 

[loosecannon]

Stocks sank, dragging the MSCI Emerging Markets Index down the most in five months, while the dollar and the Swiss franc rallied as fighting broke out between North and South Korea and concern grew Europe’s debt crisis will spread. Metals slid as China’s banks approached lending limits.

Stocks Drop, Dollar Gains on Korea Clash, Europe Debt - Bloomberg

That's funny, yeah just a little wee international instability event IS enough to strengthen the dollar and bonds and pull folks away from equities and metals. The dollar gained 1% in a day.

But Hang tough Toro, it'll come back around.

 

[Toro]

Gold is considered more of a currency than silver, given that roughly half of all silver production is used in industrial production whereas less than 10% of gold is used for industrial uses. However, silver has a higher beta, meaning that it will rise and fall more than gold.

GFMS estimates that there is 168,000 tons of gold in existence today, or 5.376 billion ounces. Gold is currently trading at $1350 an ounce. Thus, the total value of gold outstanding is $7.25 trillion.

It is estimated that there are 1 billion ounces of silver above the ground currently. Silver has been depleted. In 1950, there was an estimated 4 billion ounces. At $27 an ounce, the total value of silver in existence is $27 billion. There are 100 companies in the S&P 500 with an equity market capitalization greater than $27 billion. The total value of gold above the earth's crust is 270x that of silver.

Thus, it takes less to move the price of silver than it does the price of gold.

 

[Baruch Menachem]

Buying metals assumes there is always a greater idiot. The kind of thinking that got us into the mortgage meltdown two years ago.

There are greater idiots out there, (Right, Rdean?) but one can't always rely on them to bail you out of a bad investment.

 

[Toro]

Buying metals assumes there is always a greater idiot. The kind of thinking that got us into the mortgage meltdown two years ago.

There are greater idiots out there, (Right, Rdean?) but one can't always rely on them to bail you out of a bad investment.

Well, not entirely. Metals are based on marginal supply and demand from speculators AND producers. Copper is getting squeezed because of building in China, not because of speculators.

However, I'm sure we are going to the really great part of the Greater Fool phase for gold and silver sometime in the future. Serious money is made during that phase.

 

[Toro]

Gold and silver are getting whacked this morning. Gold is down $20 and silver down $1. Markets are worried about contagion in the euro zone as reports this morning are that Portugal was asked to ask for a bailout package. This is causing a rush into the dollar and hare-trigger selling of precious metals. Support for gold is around $1335 and $26 for silver.

 

[Paulie]

Buying metals assumes there is always a greater idiot. The kind of thinking that got us into the mortgage meltdown two years ago.

There are greater idiots out there, (Right, Rdean?) but one can't always rely on them to bail you out of a bad investment.

That's basically any bubble. And of course, like our other bubbles, this precious metals one is being fueled by Federal Reserve policy.

 

[Trajan]

Gold and silver are getting whacked this morning. Gold is down $20 and silver down $1. Markets are worried about contagion in the euro zone as reports this morning are that Portugal was asked to ask for a bailout package. This is causing a rush into the dollar and hare-trigger selling of precious metals. Support for gold is around $1335 and $26 for silver.

yea I saw that too. meh......

 

[william the wie]

Gold and silver could do anything in the shortrun.