PM investment TIMING

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dmger14's picture
dmger14
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Posts: 83
PM investment TIMING

Recently, I have used the cash from a land sale to load up on more PMs.  I agree and like the idea of dollar cost averaging, but first wanted to establish a healthy base position that balanced my paper that I cannot convert in my retirement account, and paper that I will receive in inheritance over the next decade or so.  Not to be macabre, but if you are thinking long-term, you have to consider all of your anticipated assets.  Hence the rush to establish the base.  I may be wrong, but it seems to me that, far before all the money printing goes on, more and more people will be awakened to the fact that it will go on, and that in itself can lead to massive PM buying.  In addition, I can imagine countries like China loading up on price dips, effectively putting a floor under such dips in price.  Even in a shorter-term deflation, the bank failure fear should also drive people to PMs.  Bottom line, do any of you also feel that the best time to buy is when you can afford to get some, because nobody knows when fear and increasing knowledge of a coming currency wars/devaluation race will drive up PMs even before they may happen? 

 

 

 

 

 

 

 

docmims's picture
docmims
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Joined: Jun 17 2009
Posts: 644
make sure you have

make sure you have shelter, food and water covered .  Look at Silver as an insurance policy.  Not as a pure investment.

my 2c.

dmger14's picture
dmger14
Status: Bronze Member (Offline)
Joined: Dec 7 2011
Posts: 83
Thanks.  I am not as

Thanks.  I am not as prepared as I'd like in that category.  I do stock up on canned foods and have several 10 gallon water containers and can fill my tubs, and live in a house that I just extended out 30 year fixed.  I need to get more food I know, even if it causes stress with my wife who doesn't understand.  I will focus more on this aspect now, especially since I have my base investments in place now and food/shelter are No. 1 in an emergency.

My point about PMs is that if the writing is on the wall, won't prices go up well in advance of QE and its price inflation effects?  That is the fear that led me to buy ASAP after I got the proceeds from my sale.

 

 

AWR's picture
AWR
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Joined: Dec 7 2011
Posts: 33
 My point about PMs is that

 My point about PMs is that if the writing is on the wall, won't prices go up well in advance of QE and its price inflation effects?

That is the magic question isn't it.  Your thoughts are logical but the market moves in mysterious ways.  If it was predictable it would be a simple matter of levering up with futures contracts or some other form of margin and making a fortune in a short period of time.

The pricing mechanism of markets are wonderful at bringing buyers and sellers together at the current moment, but they are not so good at setting current prices for events -- even ones that are somewhat anticipated such as QE3, or peak oil, or silver shortages, etc -- that are fairly obvious/likely but a number of months/years out.  It is simply time arbitrage (otherwise known as value investing).  Markets tend to "misprice" extremely long-term trends or outcomes, which offers high compounded annual rates of return but which could also have near-term pull-backs...it's impossible to buy the bottom.

To answer your question though: yes, I personally expect gold and silver to significantly rise upon an announcement of QE3 or whatever name (notional GDP targeting???) they give their next round of money printing.  I imagine they'll back off of the "QE" label since people are increasingly viewing it as inflationary.  They'll probably change the name to something that sounds more beneficial even though it would just be a cover for the same money printing.

It's probably not a bad idea to build a base position now.  That's not investment advice...just my own personal thought.  If you think we will ultimately experience high rates of inflation then $1,600 gold and $30 silver will look like an absolute steal.  They'll look like a bargain at twice the price.  I remember a few years ago when everyone was complaining about oil at $50/barrel as it continued through $60, $70, $80 like a hot knife through butter.  Here we are a few years later with oil lingering at $100 against the backdrop of a lousy economy.  Imagine where oil prices would be if the economy was going great guns like back in 2006/2007.

dmger14's picture
dmger14
Status: Bronze Member (Offline)
Joined: Dec 7 2011
Posts: 83
Good stuff!  I agree

Good stuff!  I agree 100%.   I was buying silver when the spot price was $10.88, but I also bought some when spot was around $37.  Over time, I don't think it will matter, I'm just amazed that PMs aren't already much higher simply because so many people HAVE to know the only way to keep the music playing is to print, and what that will do to PMs.  The markets are mysterious, that's for sure!  Also, all the manipulation, it truly is a casino anymore, trading on interference and not fundamentals!

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