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KDakotaFund (24.15)

Gold $1,518 Silver $49.25 - Now What? (Fantastic Precious Metals Read)

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April 26, 2011 – Comments (7) | RELATED TICKERS: GLD , SLV , GPL

- by Peter Grandich (This is a guy I've been following for a while now and whose advice I heed, and have regretted the few times I haven't, particularly his being one day off from the March 2009 lows.)

I’ve been aggressively bullish on gold from just above $300 and silver in the single digits. While I still believe the “mother” of all bull markets won’t end until gold hits at least $2,000+, I do think it’s time to have some sort of strategy of booking profits going forward. This desire to do so is sweetened by the fact that from well under $1,000 in gold and below $20 in silver, I targeted $1,500+ gold and $40+ silver by 2011.

Before the ultra goldbugs label me “Benedict Arnold” and call for my head, I’m not suggesting these are the ultimate highs in the precious metals for years to come. It’s close to three decades of being in and around the financial arena that cries out to me that far more times than not, it pays to take a profit…and in this case some gigantic profits one could only have dreamed of not too long ago. The game of investing/speculating/gambling is very much tilted against the little guy. All you have to do is begin to appreciate what the financial community did in the biggest financial scandal of all time just a few years ago, yet not one of those culprits have gone (or likely will go) to jail. To think you or me are on a level playing field with these bandits (excuse me, financial experts) is foolish. Therefore, now more than ever, it’s not about all or none but booking profits and building capital to play against the big dogs, have multiple times at bat and hope to pick up their scraps.

Before I suggest some possible scenarios going forward, it would be very useful to review what has occurred. Just like one looks in a mirror to see what’s behind them before driving on, we should come to terms with what got us here before we make a hopefully educated guess on what may be best to do going forward.

Full article

7 Comments – Post Your Own

#1) On April 26, 2011 at 11:21 AM, catoismymotor (30.04) wrote:

Is this like skydiving? Do I need an *exit buddy*?

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#2) On April 26, 2011 at 11:46 AM, catoismymotor (30.04) wrote:

That was a interesting read.

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#3) On April 26, 2011 at 12:13 PM, kdakota630 (29.70) wrote:

catoismymotor

Thanks.  He wrote something towards the beginning of March saying that it might be time to take some profits before May 1st but said there'd be more to follow, which was what he wrote yesterday at some point.

I'm hoping TMFSinchiruna chimes in because I'm dying to hear his opinion on the article.

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#4) On April 26, 2011 at 12:22 PM, MoneyWorksforMe (< 20) wrote:

Very interesting read. I agree there is nothing wrong with taking profits, in fact I encourage it, when price gets ahead of fundamentals. But I highly dislike the way he is focusing almost entirely on prices as oppose to fundamentals. For the same reason you can't call a top in NFLX or AAPL, simply on the basis of price, you can't call a top in precious metals. People for years now have been calling for tops in AAPL and NFLX largely on the basis of price, and likewise in gold and silver, and we all know how spectacularly each has performed over the long term...I need to see a shift in the fundamentals before dramatically changing my mid to long term view on a given sector.

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#5) On April 26, 2011 at 5:09 PM, jesusfreakinco (28.89) wrote:

Dakota,

I assume you follow KWN.  If not...

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2011/4/25_London_Source_-_Asian_Buyers_Will_Take_Silver_Over_$100.html

Asian demand and others (Middle East, India, Russia, etc) appears to be overwhelming.  We may also be on the verge of a commerical default failure in silver and may not be that far off in one in gold as well.  NO WAY I am selling anything right now.  Just hang tight.  The big gains are still ahead IMO.

Doesn't mean the road won't be rough ahead.  And if you can't take the heat, stay off margin :-)

JFC

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#6) On April 26, 2011 at 7:39 PM, XMFSinchiruna (27.85) wrote:

kdak,

It's a great article and his time-specific call is impressive (he must have more guts than I), but I will stick with my own investment and exit strategies as discussed in recent posts. I have increased my cash position above my usual 10% in response to silver's enormous run, and I will enjoy redeploying those gains systematically if silver keeps running to the downside.

At its core, though, I disagree with his thesis that one sells simply because one has acquired a certain gain. It was fundamental analysis that got me into gold and silver, and that same fundamental analysis will get me out with my gains intact. I will reduce my exposures more substantially along the road to $100, but for now I view my 15% cash position as an adequate means of extracting additional profit from this pullback.

Thanks for posting ... it was a thought-provoking piece.

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#7) On April 27, 2011 at 7:44 PM, kdakota630 (29.70) wrote:

TMFSinchiruna

Thanks for the reply, although sorry for the late response.  I checked it from another computer while pressed for time and forgot to reply until now.

My only regret is that you didn't fully agree with the guy because now I have to put more thought into whose advice to follow.  LOL!

The safe bet is to sit tight and ride anything out that happens.  The more adventageous route is to try to time a correction/retracement to maximize profits.

I didn't sell anything yet and happy I didn't since Great Panther rebounded quite nicely today.

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