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XMFSinchiruna (28.56)

Timely Guidance for Silver Investors

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56

April 25, 2011 – Comments (52) | RELATED TICKERS: SLW , SVM , HL

I began writing this piece even before this morning's intraday reversal. It will be interesting to see whether COMEX traders can foment a follow-up push towards that $50 mark in the near-term, or whether traders turned shy as they approached and concluded that they'd come too far too fast to present a viable threat to the incredible seeling pressure that, in all likelihood, looms at $50. If they do bust straight through without a prolonged fight at $50, then you can chalk it up to commercial signal failure of an intractable sort.

Here are my further thoughts on where we stand:

http://www.fool.com/investing/general/2011/04/25/timely-guidance-for-silver-investors.aspx

Nothing about these recent dislocations alters my long-term strategy for investing in silver. To the contrary, seeing so many silver mining equities priced -- in my view -- as though silver were trading near $30, I perceive a particularly favorable risk-to-reward profile among well-selected shares at present. Silver Wheaton, Hecla Mining, and Silvercorp Metals (NYSE: SVM  ) strike me as compelling valuations here; while carefully vetted junior explorers and producers warrant the attention of those seeking higher-octane returns. Whether silver busts through $50 with ease, or -- perhaps more likely -- retraces several paces after glimpsing that bastion of technical and psychological resistance, my bullish long-term outlook for silver prices and mining equities is unfazed by either outcome.

52 Comments – Post Your Own

#1) On April 25, 2011 at 1:00 PM, cbwang888 (25.89) wrote:

I think $50 silver is a done deal after Fed meetings this week.

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#2) On April 25, 2011 at 1:04 PM, golddlog (< 20) wrote:

Bought some more GPL at $3.63 this morning with more cash waiting to be deployed.  Opportunity knocks......

Chris, do you have Tyhee Gold in the queue for your micro-cap series?  They had another good drill result on the Northern edge of the Ormsby zone and will include in the next reserve/resource estimate due out later this year to fortify the economics of the project.  Thanks for all your hard work

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#3) On April 25, 2011 at 1:04 PM, XMFSinchiruna (28.56) wrote:

cbwang888

I'm just curious, can you tie that expectation in with something you expect to come out of the meetings? 

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#4) On April 25, 2011 at 1:05 PM, XMFSinchiruna (28.56) wrote:

golddlog

It's next, actually. :P

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#5) On April 25, 2011 at 1:13 PM, Valyooo (99.82) wrote:

Yes, I think a lot of people have "once silver hits $50, im out" mindset.

But, silver is still up on the day.  I think the fed meeting will be a huge catalyst one way or another.

If we blast through $50, I will start loading up on SLW calls.  If we struggle, I will just do nothing....and wont start buying more slw/gpl until silver gets down to around $40.

Either way, I picked up some gpl at $3.68 this morning

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#6) On April 25, 2011 at 1:36 PM, cbwang888 (25.89) wrote:

I don't expect anything suprising coming out of the Fed meeting. That is why silver and gold will continue to march higher as USD will continue going south. Any immediate reaction before / after the meeting has no longer term effect unless Fed is going to screw US Treasury by rising interest rate aggressively.

The US debts is the problem which cannot be solved without hyperinflation ...

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#7) On April 25, 2011 at 1:45 PM, MoneyWorksforMe (< 20) wrote:

When everyone anticipates a large correction, whether it be the stock market or precious metals, it usually doesn't materialize...Everyone has been fixated on $50/oz. silver as a major resistance level for quite some time now. For this reason, I don't think we experience another sharp correction unless the dollar rallys...Volatility will continue through Wed. when Bernanke speaks at the FOMC meeting...I don't expect any curve balls from Bernanke...A continuation 0 /.25% interest rates for the foreseeable future and an end of QE2 in June as scheduled...More QE is coming down the road, but there will be no mention of it at this meeting...

If we like we can use gold to see how it performed before and after reaching its first all-time high since 1980, in 2008. In early 2008 gold blasted through its former all time high of ~$800/oz. rallying another 20% to $1000/oz. before correcting...

Regardless of short term movements in price, I agree very strongly with you Sinch, and overall I remain very bullish on silver and gold going forward.

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#8) On April 25, 2011 at 2:01 PM, XMFSinchiruna (28.56) wrote:

Interesting thoughts, guys, and in many respects along the lines of my perspective. Thanks for opining. :)

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#9) On April 25, 2011 at 2:32 PM, jesusfreakinco (29.59) wrote:

Word to the wide for newbies...  Days like this where logic doesn't prevail (miners not rallying even though metal is up) require nerves of steel.  If you trade on margin, use no more than 60% of your margin so you can withstand days like today (or worse raids...) so you leave plenty of fresh powder.

As Sinclair says, as a rule of thumb, sell 1/3 on strength and buy it back on weakness - much easier said then done...  My experience is that it is difficult to exit before the raid(s) since the timing of the raids are often illogical.  It is also difficult to judge 'strength' to know when to sell 1/3 into.  Hence, being fully margined will KILL you...

Just a few thoughts...  Anyone with more disciplined strategy can jump in here with their thoughts.

JFC

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#10) On April 25, 2011 at 3:21 PM, XMFSinchiruna (28.56) wrote:

Warning: Use no margin whatsoever where precious metals are concerned.

Put the margin accounts away, people. Or when the tides turn on a dime and corrections run deeper than you ever thought possible, at least know you were thoroughly forewarned.

jesusfreakinco

To invoke margin as a viable approach to pms in the same breath that you invoke the guidance of Jim Sinclair is something of an insult to the man. His views on margin could not be clearer. Gold and silver are alternatives to debt. To "purchase" them with debt entirely defeats the purpose.

.....

Can you tell how I feel about margin? :)

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#11) On April 25, 2011 at 3:59 PM, outoffocus (24.54) wrote:

Yea I picked up some more SLW this morning.  I dont know when its going to break out but at these valuations its gotta do so soon.

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#12) On April 25, 2011 at 4:16 PM, jesusfreakinco (29.59) wrote:

TMFSinchiruna

The theory of not being on margin and the practicality of most traders in this market are two different things.  I agree that most people should stay off margin.  I can attest to the fact that margin is dangerous and, at times, very, very costly.  However, practically speaking...  most ARE trading on margin.  This is why I threw in my two cents...

Live by the sword... die by the sword...

Physical gold and silver ARE alternatives to debt.  I agree.  Paper gold and silver (even G/S miners) are just paper...  The only true wealth one can count on is physical...  We may all wake up one days with brokerage accts that are worth less or worthless.  I am hoping that is still years away b/c I want this bull to run for awhile.  However, that is still a possibility you can't deny.  So.. paper gold and silver is at best speculative IMO.  If you want security, go all to physical (or physical-like investments such as GTU, CED, PHYS, and PSLV).  My two cents FWIW.  Always appreciate your feedback Chris!

JFC

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#13) On April 25, 2011 at 4:17 PM, jesusfreakinco (29.59) wrote:

outoffocus

 I dont know when its going to break out but at these valuations its gotta do so soon.

Let's hope so... I am losing my patience with these fraudsters!

JFC

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#14) On April 25, 2011 at 4:20 PM, Gonzhouse (67.27) wrote:

Interesting discussions.  Long term, silver is going way above $50/oz as the only hope the US has of paying off the massive public debt is inflation (paying back with cheaper dollars).  Everyone realizes this and it is pushing the search for alternatives to fiat currency, first and foremost commodities.  The fact that my mining equities have not moved lockstep with the price of silver is just a temporary phenomena.

Historically in long-term commodity rises, the upswings are accompanied by short-term corrections. If you invest for the longer term, corrections just make convenient entry points for more investment.

The world's currencies are in the race to the bottom (and the US is leading the pack).  We will have some standard for currencies (other than other currencies) to guage relative strength and it will be gold and silver. 

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#15) On April 25, 2011 at 4:53 PM, leohaas (93.73) wrote:

50 is just a number. It could happen that the "if it hits $50, I'm out" mentality will keep silver near 50 for awhile. Long term, it has no bearing on the silver price.

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#16) On April 25, 2011 at 5:32 PM, reinman60 (< 20) wrote:

Some thoughts on today's silver martket...

Silver reached nearly $50 before pulling back to about 47. 

I think it will be prudent to lighten up on some long term positions when we finally make a new high; an inflation adjusted high, that is.

If I inflate the old high made some 30 years ago by the CPI, which I think we all agree vastly understates  inflation, I get a number somewhere around $140.  Seems like a reasonable initial target for the longer term.

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#17) On April 25, 2011 at 8:11 PM, silvermind (< 20) wrote:

Sinch,

Great posts (recc'd).  

Update on AZX:  I have communicated with Eric Owens (President and CEO of Alexandria Minerals - (featured in http://caps.fool.com/Blogs/compelling-pm-microcaps/569492  and in  Live Chat with Alexandria Minerals' CEO - Dr. Eric Owens - 10am EST (www.azx.ca/home.asp) regarding a discrepancy in AZX's homepage table of M&I and Inferred oz. and the text above the table.  The text sums add up to 904,000 oz. but the table shows 718,000 oz.  Eric said that they are upgrading their website and will be changing the table to reflect 900,000 oz. in the 2 mines (Orenada and Sleepy) in the next couple weeks.  Got a professional yet pleasant reply to my question as to why this table didn't match his verbiage just above the table.  (The table currently only reflects 718,282 oz.).  If you would like I could post Eric Owen's reply.  The difference was due to the fact some of the table was based on 1 gram or 2 grams per ton cut-off but the totals in the text and in the presentation were based on 1/2 gram per ton cut-off.

Regarding this article: First of all Thanks for the Timely Guidance! Sinch, I know AZX is a mostly-gold play.   Do you own an explorer type (or 2) like AZX in stage and quality but that is a mostly-silver play?  Any you feel are close to AZX in Management ability?  I need the "higher-octane" for my portfolio this year.  

 

 

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#18) On April 25, 2011 at 9:11 PM, HarryCarysGhost (99.77) wrote:

Not to toot my own horn, but hey if I don't do it, who's gonna do the tooting?

Had Caps picks CPFXF.pk, SIL, NRG, SSRI, AG and GPL set to close this morning.

Also sold enough of my RLH of EXK, GPL and SLW to where the remaining shares are completely free to me (I did that a few weeks ago). Someone once said you never went broke from taking profits.

Now does this mean I'm down on Silver absoulutley not. I'll probably open up those picks again. Really just depends on what the dollar does.

Sinch as always thank you for your help in understanding the PM markets.

You Rock!

Cheers.

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#19) On April 25, 2011 at 11:10 PM, XMFSinchiruna (28.56) wrote:

Silver near-term downside remains relatively limited, imo, so long as the COMEX remains in backwardation.

http://kingworldnews.com/kingworldnews/KWN_DailyWeb/Entries/2011/4/26_James_Turk_-_Silver_Still_in_Backwardation%2C_Headed_Higher.html

I'd be surprised if it dipped under $40 with the backwardation still in place, but if the dollar were to somehow get a boost it could be conceivable.

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#20) On April 26, 2011 at 1:06 AM, Valyooo (99.82) wrote:

What site do you use for future prices, so I can check if there is backwardation or not on my own?  Which site is your favorite?

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#21) On April 26, 2011 at 1:53 AM, ag77840 (21.07) wrote:

I just placed a stop order at $10.94 for my EXK position I purchased at $7.20.  I feel like if there is a sell off, it will be fast and quick. Regardless of whether silver is still undervalued (I believe it is), silver stocks have had quite a run and people may be profit taking. The reality is that the stock market is volatile, fast moving, and dysfunctional. I am keeping my added positions to EXK I purchased in the $11.50 range, and holding long term. This way I would be able to profit take and reinvest if there was a steep drop, hopefully catching a bottom.

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#22) On April 26, 2011 at 3:32 AM, silvermind (< 20) wrote:

sah713,

If you bought at $7.20 it appears that would have been around December last year or Feb this year.

The problem with selling prior to holding the stock for 1 year is the tax hit - it can take a lot.    If you are paying tax on much volume (when holding less than a year) you could be paying close to 45% --- losing about 1/2 of your gain.   

 

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#23) On April 26, 2011 at 8:09 AM, XMFSinchiruna (28.56) wrote:

Valyooo

I use: http://www.barchart.com/futures/

Clicking on the product name will list out the range of contracts. Taking a closer look this morning, most of the market's backwardation was wiped out yesterday with the follow-on weakness. The Dec. 2015 contract that Turk referenced as being $0.63 beneath spot during the day yesterday has since swung to $0.79 above spot. 

The most significant remaining outlier of backwardation is in the December 2013 contract, which is some $0.40 below spot.These factors would be valuable for silver investors to watch over the comingdays, as developments therein (along with movements in the USD and gold) will give your best clues about what lies in store for silver.

I personally am hoping for a deep correction in silver. I'd like to see us get back to $35 or so before moving higher again, because after a retrace like that I believe it would have the necessary legs to sustain momentum above $50 alongside a resurgent momentum in gold. 74 is a key pivot for USDX at the moment, though that's just a foreshadow of the ultimate pivot point at 72.

sah713

Sounds like a sensible approach, provided you are taking off a small-enough portion of your exposure that you will forgive yourself if silver does launch higher. I agree it looks like $50 may not be in the cards quite yet judging by yesterday's action, but keep in mind anything's possible.

I personally keep my core positions intact always, and trade around that position with 10-20% of play money that I use to play these sorts of swings. 

Anyway, nice gain on EXK ... congratulations! :)

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#24) On April 26, 2011 at 8:18 AM, reinman60 (< 20) wrote:

@valyoo:

Try here:

 http://www.cmegroup.com/trading/metals/precious/silver_quotes_globex.html

 This is the CME website, and it lists the prices for all silver furtures contacts were there is an open interest, out to Dec. 2015.

As I'm writing this, you'll notice that the backwardation is now only partial: Dec 11 is trading at a premium to  May 11 (ignore the April contract, it isn't active anymore), but only by a few cents.  Still not a normal term structure here by any means.

My guess is, if we start to move higher into the delivery period (starts April 29), the backwardation will increse.

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#25) On April 26, 2011 at 8:43 AM, reinman60 (< 20) wrote:

Chris,

I'd love to see $35.  I need some more physical, and that would be a great price.  I'm not sure we'll see it, though. But as you said, anything is possible.

What's interesting to me is that despite the parabolic rise, it doesn't seem like ther's been any short covering. Open interest yesterday rose by about 5500 contracts!  I think its possible that the large buyers, whoever they are, and the hedge funds try to squeeze the shorts even more going into delivery.  They expended a lot of ammunition yesterday.  Time will tell.

I don't trade around my position.  My PM position is not really large enough, only about 10% of my portfolio.  I'm looking to increse it by adding quality miners (SLW, EXK, ALX) as well as juniors on any pullbacks.

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#26) On April 26, 2011 at 8:49 AM, MoneyWorksforMe (< 20) wrote:

Well considering yesterday's move to near $50/oz. and last nights crash to the mid 40's silver did experience a 10% correction already...It happened over the span of hours, as silver is now back up above 46. Nevertheless it was still a correction, and a moderate sized one at that...Seems like a lot of buying going on around the $44/oz-$47/ oz. range.

Was that it for the correction?...Perhaps. Expecting lots of volatility through tomorrow. But it just goes to show ya that timing this market is extremely difficult, and you don't want to be leaning to hard either way. The risks of being out are sometimes greater than being in... 

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#27) On April 26, 2011 at 10:54 AM, reinman60 (< 20) wrote:

Just came across this, and I think its must reading.  From Jeremy Grantham of GMO, a global investment manager with over 100 billion in assets under management.  In my opinion, and lots of other peolple's for that matter, Grantham is one of the smartest, most rigorous, and disciplined guys in the business.

He sees a paradigm shift in the making: a reversal of the 100 year trend in falling commodity prices.  The implications for copper, silver, gold- you name it- are enormous.  Never one to be concerned with short term fluctuations, he lays out the big picture in ways that really get you focused on what's important.

Here's the FT's take on his view:

http://ftalphaville.ft.com/blog/2011/04/26/553231/grantham-comes-face-to-face-with-a-paradigm-shift/

 

And here's a link to the full text of his quarterly letter:

http://www.gmo.com/websitecontent/JGLetterALL_1Q11.pdf

Great stuff!

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#28) On April 26, 2011 at 12:43 PM, XMFSinchiruna (28.56) wrote:

reinman60

Thanks for posting. I'm excited to check it out!

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#29) On April 26, 2011 at 12:52 PM, XMFSinchiruna (28.56) wrote:

silvermind,

I see no silver microcaps that match my view of Alexandria's management from a standpoint of all-around excellence that I've been able to corroborate through first-hand encounters, etc.

But ... I do have my eye on one, which is run by former top brass at Hecla. That's a sweet set of resumes those guys have there, and the top project may hold potential beyond what is presently known. I am looking to add to my position, so I can't name it, but Google Hecla's former CEO and see what you discover. :)

Most of the other silver microcaps that had outstanding management have ceased to be microcaps per my definition. :) 

Great Panther, Endeavour, Fortuna, and also the one JBay especially loves ... those are the shining stars for Mexican silver producers with respect to management.

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#30) On April 26, 2011 at 12:55 PM, kdakota630 (33.79) wrote:

TMFSinchiruna

I am looking to add to my position, so I can't name it...

Very much looking forward to when you can.

Also, I posted an article that I would very much appreciate your perspective of when you get the chance.

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#31) On April 26, 2011 at 1:20 PM, reinman60 (< 20) wrote:

Chris,

 Know the one your talking about.  I started a small position about 6 weeks ago with an eye towards adding on pullbacks.  Good to hear you've given this a vote of confidence.

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#32) On April 26, 2011 at 1:47 PM, Gonzhouse (67.27) wrote:

 TMFSinchiruna

..."That's a sweet set of resumes those guys have there..."

Thanks for the bread crumbs to get to this miner.  They are definitely the Varsity Team, not only in terms of breadth but depth.  It must be promising for this many proven vets to join up.

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#33) On April 26, 2011 at 9:03 PM, devoish (98.73) wrote:

Sinchiruna,

I am sure we don't see eye to eye on lot of things and this is probably another...

Word to the wide for newbies...  Days like this where logic doesn't prevail (miners not rallying even though metal is up) require nerves of steel.  If you trade on margin, use no more than 60% of your margin so you can withstand days like today (or worse raids...) so you leave plenty of fresh powder.

If that does not sound like a bubble warning to you, I don't know what might. The housing bubble lasted 4 years after people began to borrow just to speculate, but that does not mean a bubble has not begun. Anyway if people are borrowing to buy gold/silver, the moneys run out.

just my 2cents.

Best wishes,

Steven

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#34) On April 27, 2011 at 8:47 AM, XMFSinchiruna (28.56) wrote:

devoish

I mean no disrespect, but devoish, heeding your prior bubble warnings about gold and silver (see comment #6) would have caused investors to miss out on the massive gains realized since. I don't know what a new log sliptter sells for, but I could purchase a lot more of them today than I could have in December 2009. Just food for thought.

Buying gold or silver on margin is asenine. So is the word "bubble" because of its rampant mis-use and disparate definitions. The silver price remains firmly grounded in underlying market drivers that are real and have real causes that are not going away.

As for housing, I think you'll find that people were borrowing to speculate in real estate far longer than four years before the peak. Think of all the "flippers" that were out there. Most people I talk to still have zero silver exposure and have no idea what the price is. We are nowhere even in the vicinity of silver representing a comparable case comparison.

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#35) On April 27, 2011 at 11:11 AM, reinman60 (< 20) wrote:

Interesting article by Avery Goodman, a securites lawyer. He is a member of the roster of neutral arbitrators of the National Futures Association (NFA) and the Financial Industry Regulatory Authority (FINRA).

He makes some very astute observations. For example, regarding  price manipulation in the silver market:

"Since it has proven impossible to fully suppress price increases, the next best thing is to orient the manipulation process to create artificial high volatility, and thereby discourage conservative investors from buying the metal."

I think his remarks about platinum and palladium are particularly interesting, as I have a postion in SWC.

http://seekingalpha.com/article/265381-short-sellers-now-screaming-about-a-buy-side-silver-conspiracy

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#36) On April 27, 2011 at 1:11 PM, jesusfreakinco (29.59) wrote:

devoish

Just curious... if stocks and options and futures contracts are being bought on margin, are they in a bubble as well?

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#37) On April 27, 2011 at 3:42 PM, reinman60 (< 20) wrote:

Out of control silver market.  Not necessarily predicting anything, because anything could happen, but a commercial signal failure looks like an increasing possibility. 

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#38) On April 27, 2011 at 4:40 PM, AlbertaBorn (< 20) wrote:

Wow, to all of you who had the opportunity to increase your GPL holdings yesterday, all I can say is I am jealous.  This could be a volatile few weeks though, hopefully I'll get another chance below $3.50.

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#39) On April 27, 2011 at 4:56 PM, Speed03 (< 20) wrote:

Hey Chris, are you familiar at all with ROMIOS GOLD RESOURCES INC symbol RG on the Toronto Venture? They are in the same vicinity as Copper Fox and Galore Creek.

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#40) On April 27, 2011 at 7:42 PM, Speed03 (< 20) wrote:

that should be Copper Fox's Schaft Creek and Nova Gold/Teck's Galore Creek.

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#41) On April 27, 2011 at 8:13 PM, Speed03 (< 20) wrote:

my apologies for 3 straight post....wanted to add this link:

http://www.romios.com/s/Image.asp?i=Maps/GaloreRegionalGeo1.jpg&id=446182

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#42) On April 28, 2011 at 1:54 AM, hdotmom (< 20) wrote:

 TMFSinchiruna

You wrote:  Buying gold or silver on margin is asenine.  I am thinking as I watch my husbands 401k deteriorate as the dollar declines that we may borrow against it as much as they will allow and invest it into gold and silver.  My thinking is that the market is going to fall, the dollar is falling and we have no vehicle offered to invest it into gold and silver.  We can afford the repayment and the interest would be paid to ourselves anyway.  I imagine there are fees involved but they can't possibly be as bad as letting it disappear.  I have put some of it in dodge and cox international (dodfx) and some in an energy money market (vgenx.)  The rest is in cash.  I know I am missing this rise in the market but I really think there is going to be a crash and it can take days for us to get out.  I have been figuring on putting it back in the vanguard S&P 500 index when it crashes.  We can't touch the money for another 10 years anyway.  My questions is... do you think my ideal is nuts???? 

 Rose    

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#43) On April 28, 2011 at 6:09 AM, XMFSinchiruna (28.56) wrote:

hdotmom

Hi Rose ... yes I do think that's nuts. :) As tempting as the idea may seem at times, there are no circumstances under which I could ever condone gold or silver exposure that is achieved through borrowed funds. But nor do I have a good answer for you in terms of attractive 401k options, so I'm afraid I'll be doubly unhelpful in this instance. I know many people facing the same frustration with respect to restrictive 401k plans. 

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#44) On April 28, 2011 at 10:05 AM, reinman60 (< 20) wrote:

Words of wisdom from Rick Rule of Global Resource Investments, whose company was recently aquired by Sprott Asset Management.  He describes what it takes to be a successful investor in the resource space, and stresses (1) having the proper pyschological stamina, and (2) not using leverage.  He's a great speaker, and he makes his point quite well.

 

http://www.caseyresearch.com/articles/making-money-volatile-market

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#45) On April 28, 2011 at 10:06 AM, AirForceFool (99.94) wrote:

Great Panther Silver has it's own board now for those of you that are following or own shares.

 http://boards.fool.com/great-panther-silver-gpl-120100.aspx?mid=29266199

 Chris

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#46) On April 28, 2011 at 6:20 PM, richthegeek (< 20) wrote:

Sinch / hdotmom,

 I've been wondering how to deal with my 401k's as well. Trying to save as much as I can for retirement (should that ever occur), I've locked a fair amount up in IRAs. Unfortunately the investment options are limited. There are self directed IRAs that you can invest directly in PMs (follow the links at www.APMEX.com, for example), but I wonder how safe my money is when it is sitting in a corner of a warehouse. Will it still be there when I need it? The other option is to invest in PM miner stocks (SLW, for example), which are likely to be safer than watching my money slowly errode in a brokerage account, but not as safe as holding the actual metal. Sinch, what is your take on PM investment via a self directed IRA?

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#47) On April 29, 2011 at 12:28 AM, hdotmom (< 20) wrote:

richthegeek

Our problem is almost all of our money is in a 401k not an IRA.  We are given a set of options.  I convinced them to add an international and the 500 index fund but they don't have anything available in the gold and silver area.  We can't touch the money unless my husband quits his job and that isn't going to happen in this economy.  I have a small retirement from when I worked and it is in cef and slw and some other miners.  We put all we could afford into his 401k, I wish now we had put it in IRA's.  I respect Chris' advice so much it is hard for me to go against what he believes.  But I am so sure we are going to lose it all to hyperinflation as that is the only way we can get out of debt that I am going to do further research.  The way I am thinking is the money is lost anyway.  All savings will be lost and so will debt.  So if you were a "live for today because tomorrow may not come," then you may have beat the system.  But if you saved and lived life conservatively then you will soon be in the same boat but without all the fun times.  If I am wrong then I will be so happy about being wrong that I don't think I will be upset about my investments.  I would never go to a bank and take out a loan for this that would be nuts.  If I find that is what it is like doing, I won't do it.  But if it is free and then paying myself interest like I have been told then I may go for it.  It is not like I am doing anything except giving my self more investment options for about 5 years at the cost of some interest that I pay myself.  The future of our nation, the way I see it, is going down hill.  How fast is the question.  I have 3 kids and the thought of them not having what we did just makes me crazy. The link below explains borrowing from your 401k. 

 http://www.401klookup.com/borrow-401k-loan.html 

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#48) On April 29, 2011 at 9:00 AM, XMFSinchiruna (28.56) wrote:

richthegeek

I personally think that CEF provides the same function as physical bullion within the context of a self-directed IRA. I recommend a basket of precious metals exposure that includes some bullion exposure through a vehicle like CEF, but also with significant weighting in carefully selected mining stocks.

hdotmom

You may be surprised, stock indeces have a way of adjusting to inflationary forces over time as well. If you have international options, and ways to avoid certain segments like financials, it's possible the damage when crisis returns could ultimately be limited in scope. Keeping some cash and buying a crisis-fed dip in the indeces can also have powerful impacts. I just want you to carefully explore all your options. I'm rooting for you!! 

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#49) On April 29, 2011 at 11:26 AM, hdotmom (< 20) wrote:

TMFSinchiruna

Thanks so much, that is what I am doing.  I might have too much in cash as I am watching the stocks go up while I am sitting losing to inflation.  I figure when it crashes I will jump in with both feet and sink or swim.  I am hoping the current doesn't take me down.  I left money out of my son's stem cell money too, But yesterday I put most of it in cef and figure that is like cash (but not) at least I'm not losing to inflation with it.  If the market falls I will take it out of cef at some point and jump in the market with some of his too.  I really want to thank you again for helping us.  I am up on all but one stock, I did luck out with timing.  Back to our 401K...I can pay it back in a lump sum if the market falls and invest in stocks.  If the market doesn't fall and gold and silver goes down (stop laughing) then I can afford to make the payments back to our 401K because that means everything is pretty much the way it is now.  I see no possible way out for the USA other than major inflation,  short of all the countries saying, "hey you have been nice to all of us for all these years....we forgive your debt"  or maybe the richest people in the USA giving our government trillions of dollars, (ok, now I am laughing with you.)  I completely understand that I may lose the money but I may lose the money in the market or to inflation anyway.  I just really believe that gold and silver is the way to go.  I can only borrow 1/2 anyway up to $50,000.  And do not know if there are rules for a reason.   I hope you don't think me stupid, however, I am crazy!  Just ask anyone who knows me.  Again, I can't thank you enough for all you do....Rose     

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#50) On April 29, 2011 at 6:18 PM, devoish (98.73) wrote:

Sinch,

Fair enough, the price of gold has gone up since then. The price could go up from here, too.

I know that.

Housing went up for longer than I thought it could too.

As for housing, I think you'll find that people were borrowing to speculate in real estate far longer than four years before the peak.

Ok good, we agree.

But the people you are calling "speculators" and "flippers" today, were called "investors" in housing then. People were saying the housing price increases were "grounded in solid fundamentals" then too.

There are differences though. In 2001 at the beginning of the bubble, everybody wanted to own a house and there were lots of "countrywides" throwing money at it. Not that many people want to own gold, and there is no "gold" lender. There is a lot less margin in "investor" (trader)accounts than there were loans from countrywide, and I suspect that will run out too.

I have missed every penny of golds increase in price, and if it doubles from here, I will miss that too.

No disrespect intended ,you know much more about the gold market than I do, but I saw the comments about borrowing to buy gold as a pretty blatant red flag.

I absolutely respect that you advise people not to use margin, but it is clear some are not listening. Like I said a year ago in reply #6, before I missed the gains you have gotten, it sounds like any other bubble to me.

Best wishes,

Steven

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#51) On April 29, 2011 at 6:43 PM, Gonzhouse (67.27) wrote:

hdotmom

The surest way (unfortunately) to get at your 401K money is to cease employment at the firm where it's located;  you can then open up a self-directed IRA and invest in individual stocks.  As long as you are in a 401K, your investment options are limited to the funds they offer. 

Absolutely agree with Sinch that if you have that limitation, at least overweight in foreign stock funds as protection against an eroding dollar.  Also agree that borrowing your own 401K money, as innocent as it sounds, is fraught with risk, very much amplified when the proceeds are used for investment in volatile commodities.  A)  It's still a loan that you pay back with interest, B) if you leave the company's employment, the loan amount is usually payable in full within 60 days.  Failure to pay it off constitutes a distribution and you are subject to income tax plus early distribution penalties.  NOT GOOD.

This link will take you to a straightforward explanation of the pros and cons.

http://www.401khelpcenter.com/loans.html 

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#52) On April 29, 2011 at 10:30 PM, silvermind (< 20) wrote:

Sinch,

Thanks for the comments on microcaps!  I looked into it, and I believe the silver microcap is really good and is even producing now, but I need to analyze it compared to AZX regarding the disconnect from the market.  My opinion is that with the current (and upcoming) test results on Akasaba and the already confirmed 900,000 au oz. that AZX has plus the Whiskey Jack and other strong possibilities that AZX has plus the management strength of AZX makes AZX about as strong a play as GPL in May 2010 at 79 cents per share.  I really need to compare the two further (AZX and the MIQ*).  It is hard to beat AZX at .215 per share (US dollars).  In the coming months AZX will be seeking a j/v partner on the Orendada property with a mid or major producer based on the economic study recently completed by the independent engineering firm BBA Associates of Montreal.  I hope to find a good silver play and will continue DD.  The MIQ (MicroCap in Question) is really compelling on my initial reveiw - the average 2007 price was approx $2.50 and now it is under $1.  I need to search out if the company has issued more shares since 2007, test results on exploration, projected current SEO etc.  Thanks again!

*MicroCap in Question

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